VEA: Do Not Confuse Cheap Price With Good Bargain
Developed ex-US stocks, despite being cheaper, are not good bargains compared to US equities based on dividends and book values. US equities have higher required returns when their superior dividend growth and profitability are considered, making them more attractive despite higher valuations. The valuation advantage of ex-US stocks is diminished once differences between sector compositions are considered.
VEA ETF: America's Allies Are Faltering
The Vanguard FTSE Developed Markets Index Fund ETF Shares offers broad exposure to foreign developed markets, including the EU, UK, Japan, and S. Korea. Europe's natural gas storage levels are plummeting, potentially leading to a repeat of the 2022 natural gas price spike. Major LNG consumers like Europe, Japan, and S. Korea are bidding up prices, leading to sharply higher energy costs.
VEA: A Bad Pick For Trump's Second Term
VEA ETF underperforms due to heavy exposure to stagnant European and Pacific economies. Rising global trade tensions further limit VEA's growth potential. I give a "Sell" rating for the VEA ETF.
VEA: Expecting A Pause In The Uptrend, But Developed Markets Remain Cheap
I maintain a buy rating on VEA due to its attractive valuation, strong diversification, and higher dividend yield compared to US equities. VEA's underperformance relative to the S&P 500 is due to its lower exposure to tech and higher exposure to cyclical sectors. The US Dollar Index's stability in 2024 has been a tailwind, but VEA's diversified holdings have limited its alpha generation.
VEA: Favorably Valued With Lower Risk Than Emerging Markets
VEA is a buy due to solid outlook for developed markets including Japan, its low expense ratio, high diversification, and substantial dividend yield. VEA excludes emerging markets and therefore reduces risks associated with Chinese holdings including tariffs and investment bans. VEA offers investors with diversification away from U.S. markets which currently have multiple indicators of being overvalued.
