Under the Spotlight: Vanguard All-World ex-US Shares ETF ($VEU)

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For most of the past 15 years, betting against Wall St has been a good way to watch someone else make more money.

The U.S. share market has outperformed most major regions, helped by tech giants like Apple ($AAPL), Microsoft ($MSFT) and a small group of companies that came to dominate global indices. But international markets made up ground in 2025, and the debate over whether they can keep outperforming has followed investors into 2026.

For investors worried their portfolio has become too reliant on Wall Street, the Vanguard All-World ex-U.S. Shares Index ETF ($VEU) has become a popular option. Let’s put it under the spotlight.

Beyond Wall St

After around 15 years of U.S. dominance, international equities outperformed their American counterparts by roughly 17 percentage points in 2025. 

Those gains were spread across Europe, Asia and emerging markets. The rally may prove temporary, but it was enough to have investors and analysts questioning whether the U.S. would continue to lead.

Valuation offers some clues. At the end of 2024, U.S. large caps traded at 24 times forward earnings and returned roughly 19% over the next 14 months, as shown in Vanguard’s chart below. Global ex-U.S. markets started at much lower valuations and outpaced Wall St by a wide margin.

Wall Street is also unusually concentrated. The S&P 500’s 10 largest companies account for about 40% of the index, roughly double their share a decade ago. Concentration alone doesn't spell trouble, but the risk rises when a small group of companies is priced for very high growth.

U.S. companies may continue to lead. But after years of Wall Street carrying the market, international shares are starting to look like a credible alternative.

Inside $VEU

This might explain why VEU has become one of the top-traded ASX equities on Stake this year, with trades over the past three months up 230% from the same time last year.

Its outperformance of the S&P 500 index over the last 12 months is one reason. The other is portfolio construction. The fund strips out U.S. stocks, which typically accounts for over 60% of the MSCI All Country World Index. 

This means you can pair it with a dedicated Wall St fund and choose the split between America and everywhere else. 

The fund holds over 3,700 large and mid-cap companies across developed and emerging markets. Around three-quarters of the portfolio is invested in developed markets, with the remainder in emerging economies.

Japan is its largest single-country exposure, followed by Taiwan, the UK, South Korea, Canada and a large EU allocation. Its biggest holdings include TSMC ($TSM), Samsung Electronics, SK Hynix ($SKHY) and ASML ($ASML), giving investors exposure to much of the global semiconductor supply chain. Financials are the largest sector overall, followed by technology and industrials.

The top 10 holdings account for just 16.3% of the fund, making VEU far less concentrated than the S&P 500. It’s also broader than developed-market alternatives such as Betashares’ $EXUS because it includes emerging markets.

 VEU does have a few gaps. It excludes small caps and holds around 4% in Australian shares, creating some overlap for investors who also own a local ETF.

Global ETF alternatives that exclude Australia as well as the U.S. include Betashares' EXUS and Vanguard's $VXUS.

The fine print

VEU’s management fee (MER) is just 0.04% a year, equal to around $4 annually for every $10,000 invested. That makes it one of the cheapest ETFs on the ASX.

The structure of the ETF is a little more complicated. The ASX-listed VEU is a CHESS Depositary Interest over a U.S.-domiciled Vanguard fund. Australian investors therefore generally need a valid W-8BEN form to receive the reduced U.S. withholding-tax rate on distributions.

That structure can also create what’s called ‘tax drag’. The companies held by VEU may have tax withheld in their home countries before their dividends reach the U.S. fund. Vanguard says the distributions received by Australian investors are generally already net of this tax, meaning some income has disappeared before it reaches their account. This is typically around 0.30-0.40%, on top of its 0.04% expense ratio.

Vanguard pays quarterly distributions which have averaged around 3.4% annually over the last five years. That's not bad for a global fund. Unfortunately, because it’s U.S. domiciled, it doesn't offer a dividend reinvestment plan (DRIP).

Is it a buy?

VEU offers an unusually broad portfolio for a very low headline fee.

It may suit investors who already own a U.S. ETF and want more control over their geographic allocation. It also provides wider exposure than a developed-markets-only fund, including emerging economies and several beneficiaries of global AI investment.

The trade-off is some added complexity. Investors need to consider foreign tax reporting, currency movements and some overlap with Australian shares.

Still, after years of U.S. dominance, VEU offers a practical way to spread the risk. Whether international shares keep outperforming Wall Street is less certain.

Fortunately, investors don’t need to bet the whole portfolio on the answer.

This not financial advice nor a recommendation to invest in the securities listed. The information presented is intended to be of a factual nature only. Past performance and forecasts are not a reliable indicator of future performance. The value of your investments can go down as well as up and you may receive back less than your original investment. The author of this article and other employees of Stakeshop Pty Ltd may hold positions or have financial interests in the company (or companies) discussed above. Stakeshop Pty Ltd does not accept any liability for any decisions you may make if you consider and/or use any of the information contained in this article. As always, do your own research and consider seeking financial, legal and taxation advice before investing. This email is subject to our Disclaimers, Terms and Conditions and Privacy Policy. If you are not the intended recipient of this communication, you are not authorised to read, disclose, reproduce, disseminate or otherwise use this information. While we have taken precautions to ensure that no viruses are present in this email, you should rely on your own virus checking systems and processes. You can contact us at support@hellostake.com.

Kylie Purcell

Senior Markets Commentator

Kylie Purcell is an investments analyst and finance journalist with over a decade of experience covering global markets, investment products and digital assets. Her commentary has been featured in publications including the Australian Financial Review, Yahoo Finance and The Motley Fool. She has a Masters Degree in International Journalism from Cardiff University and a Certificate of Securities and Managed Investments (RG146).