Richard Drury As the P/E ratio of the S&P 500 ( SP500 ) continues its climb towards 30, nervous investors often suggest that investing in ETFs that hold stocks from countries besides the United States might be a good way to protect their assets. That's largely because the ETFs that invest in those markets have far lower P/E ratios right now. For example, The Vanguard Total International Stock Market ETF ( NASDAQ: VXUS ) and its various mutual fund share classes with its $429 billion AUM is by far the largest of any fund that invests in stocks based in countries outside of the US.
Vanguard tells us that as of 5/31/24, the latest date for which it releases data, VXUS's P/E ratio was only 15.4. Vanguard's S&P 500 ETF ( VOO ) at the same time had a P/E ratio of 26.
1. Since then, the P/E of the S&P 500 has risen even further and currently stands at 27.69 .
Proponents of investing outside of the U.S. argue that allocating a significant amount of your stock investment to stocks from outside of the U.
S. is advisable as it protects you against risks specific to the United States, such as its ballooning national debt and thus gives you far more diversification. VXUS holds 8,587 stocks compared to the S&P 500's 504 stocks and far more than even the much broader Vanguard Total Stock Market ( VTI ), a U.
S. only ETF which holds shares of 3,704 stocks. Investing in International Stocks is Orthodox Portfolio Strategy Practice Most financial advisors' standard portfolios and those of the incr.