International Diversification as a Hedge Against U.S. Market Volatility: Why the Vanguard FTSE All-World ex-US ETF (VEU) is a No-Brainer Buy Under $100

In an era of persistent U.S. market volatility, the case for international diversification has never been more compelling. The Vanguard FTSE All-World ex-US ETF (VEU), trading at $72.97 as of November 28, 2025, offers a low-cost, high-conviction solution for investors seeking to hedge against domestic risk while capitalizing on global growth. With a 1-year total return of 27.54%, VEU has not only outperformed the S&P 500 in 2025 but also demonstrated resilience during past crises, making it a no-brainer buy for those willing to act before the market's next correction.

A Hedge Against U.S. Volatility: Performance and Correlation

VEU's appeal lies in its ability to diversify portfolios exposed to U.S. equities. While the S&P 500 has delivered a 17.73% return year-to-date in 2025, VEU has surged 29.06%, reflecting its broader exposure to developed and emerging markets. This outperformance is not accidental but structural: VEU's 0.82 correlation with the S&P 500 ensures it moves in tandem with U.S. markets during upswings but diverges meaningfully during downturns. For instance, during the 2022 bear market, when the S&P 500 fell 19%, VEU declined only 14%, underscoring its role as a buffer against domestic overcorrections.

Historical Resilience: Lessons from Crises

VEU's track record during past crises further strengthens its case. In the 2008 financial crisis, while the S&P 500 plummeted 9.0% on October 15, 2008, VEU's international holdings mitigated losses, particularly in markets less reliant on U.S. banking systems. Similarly, during the 2020 pandemic crash, VEU rebounded faster than the S&P 500, driven by rebounds in Japanese and European equities. These episodes highlight VEU's capacity to act as a "flight-to-quality" asset in global downturns, even as U.S. markets face sector-specific headwinds.

### Cost Efficiency and Income Potential
Critics often cite currency risk and higher expense ratios as drawbacks to international investing. Yet VEU's 0.07% expense ratio-while modestly higher than the S&P 500 ETF (VOO) at 0.03%)-is offset by its 2.68% dividend yield, which exceeds the S&P 500's yield. This income stream, combined with VEU's exposure to undervalued international equities, offers a compelling risk-rebalance trade-off. As noted by Vanguard, international markets trade at discounts to U.S. valuations, enhancing long-term upside potential.

Conclusion: A No-Brainer Buy Under $100

At VEU's $72.97 price, VEU remains well below the $100 threshold, offering a rare opportunity to access global diversification at a historically attractive price. Its combination of strong performance, crisis resilience, and cost efficiency makes it an indispensable tool for hedging U.S. market volatility. For investors seeking to future-proof their portfolios, the question is not whether to own VEU, but how soon to act.