The U.S. economy could be heading for a recession. Rising inflation and interest rates could spell trouble for the country. Other economies are struggling too. However, if you want to limit your exposure to the U.S. market, then one option you may want to consider is loading up on stocks that are outside of the North America.
One exchange-traded fund (ETF) that is worth considering is the Vanguard FTSE All-World ex-US Index Fund (NYSE Arca: VEU). With this ETF, you'll pay just a miniscule expense ratio of 0.07% while getting some excellent diversification.
Approximately 40% of the fund's focus is on Europe, followed by 27% in the Pacific, and 25% in emerging markets. There are more than 3,600 stocks in the ETF in total so there won't be any single stock that will weigh it down; the largest holding as of May 30 was packaged foods company Nestle (OTC:NSRGY), which accounts for just 1.3% of the fund's weight. Other top stocks in the fund include tech company Taiwan Semiconductor Manufacturing (NYSE:TSM), and healthcare giant AstraZeneca (NASDAQ:AZN).
Year to date, the fund has declined 17% in value, performing only slightly better than the S&P 500 – the index has fallen by 18% during that time.
With an average price-to-earnings multiple of just under 12, the fund is full of modestly valued stocks. Although it hasn't typically outperformed the S&P 500 in the past, it can make for an attractive investment if you're not bullish on the U.S. economy, of if you simply want some diversification.
