The Vanguard FTSE Developed Markets ETF (VEA) has outperformed the S&P 500 over the past year and year-to-date, returning 34% and 12% respectively compared to the S&P 500's 27% and 8%. This shift is driven by factors including valuation discounts in European and Japanese stocks, fiscal stimulus abroad, and a weaker dollar boosting foreign returns for U.S. investors. VEA offers broad exposure to about 4,000 stocks across developed markets outside the U.S., with a low expense ratio and higher dividend yield than the S&P 500. While VEA has lagged the S&P 500 over longer periods, this recent trend suggests diversification benefits and a potential cyclical shift away from U.S.-centric portfolios. Investors should consider currency risks and sector differences, but VEA is a cost-effective way to add international developed market exposure.
