VSS: Low-Yielding Small-Cap Ex-US ETF Unattractive Despite Decent Total Return

Summary

• Vanguard FTSE All-World ex-US Small-Cap ETF has a large asset base and its portfolio is well-diversified among all the major developed markets and the largest growing emerging markets.
• VSS is currently trading at par with its NAV and its low expense ratio enabling investors to gain from such diversified holdings while bearing a very low risk.
• VSS’s annual average total return over the long run has been in double digits, but has been consistently generating low yields between 2 to 3.5 percent.
• Economic slowdown and geopolitical risks loom large over the future price performance of selected equity markets that VSS has been banking upon.
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Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.