If you landed here - I’d highly recommend reading my first post on VGS as it has a bit more context and depth.
What's in my ETF Portfolio - VGS - Part 1
When I first started putting my money into the stock market, I felt like I was stumbling around in the dark. I wasn’t a finance expert; I was just someone who wanted their savings to work a little harder. Inspired by reading Rich Dad, Poor Dad book. The quote goes on to say
If you’re anything like me, when you first start looking at your investing dashboard, it’s incredibly tempting to just stare at the percentages. In the beginning, I used to obsess over finding the highest numbers on the screen. I thought the whole game was just figuring out what had the biggest return last year and throwing all my money at it.
I remember a few years ago, I put a chunk of my savings into a crypto, super-hyped across different plays - day and night. NFTs, Launch Pads, Staking, Meme coins. It was up something like 10x in a few months, and I honestly felt like an absolute genius as I was printing money. But then when the market shifted, the hype died, and the price plummeted. I was left staring at a red screen, realising I had taken a massive gamble and nothing so genius about it.
"The first principle is that you must not fool yourself - and you are the easiest person to fool" - Richard Feynman.
That painful lesson taught me something crucial: chasing the biggest return percentage is almost never the best idea. Why? Because hottest trend can easily become biggest loser.
Morgan Housel's quote about success and failure states that great times plant the seeds of their own destruction. Success breeds confidence, and extreme confidence often breeds the exact risks or complacency that lead to failure.
That experience is what finally made me understand why everyone preaches about diversification. Diversification is just a fancy way of admitting, “I don’t know what the future holds, so I’m going to buy a little bit of everything.”
And that brings us to the next core piece of my portfolio: Vngd All World Ex Us (VEU).
What exactly is VEU?
The name is a bit of a mouthful, but the “ex-US” part is the secret sauce. This basket buys a slice of the biggest companies in the entire world - except for companies in the United States.
To understand why this is so powerful, let’s look at the numbers. My other global basket (VGS) covers 22 of the world’s most advanced, developed economies. But VEU casts a much wider net. It spreads our investment across 46 different countries. It gives us a true “Rest of the World” passport.
The Elephant in the Room: The VGS and VEU Overlap
Now, if we look at my portfolio, we’ll see I hold both VGS and VEU at the same time. I have to make a confession: by doing this, I am essentially buying thousands of the exact same companies twice.
Yes, 70% of VGS is US top companies - but then the devil is in the details. There are few companies that they don’t make it into IVV. Because the IVV mirrors S&P 500 and that has much more strict criteria to be considered in it. This criteria rules out companies like SpaceX, MSTR etc., which I think it’s worth taking that bit of a risk rather than getting tempted to hold the individual stock. It’s just that adventure bits of not missing out doesn’t kick in to lure me back into buying something hot at that moment and be at comfort that I still own them under the VGS ticker.
The VIP List: How does a country get into VEU?
The real magic of VEU is that it opens the door to the “Up-and-Coming Neighborhoods” (officially called Emerging Markets). These are fast-growing economies like India, China, and Brazil.
But a country doesn’t just get added to the VEU basket because it’s popular. It has to pass a rigorous annual stress test by index providers. They use a strict scorecard (looking at 22 different criteria) to make sure the neighbourhood is safe for our money. Here is what they demand:
The Rule of Law: Does the country have a formal regulatory body (like a stock market referee)? Are regular, everyday shareholders treated fairly?
Capital Freedom: Can international investors easily move their money and profits in and out of the country without the government randomly freezing their cash?
Size and Liquidity: The market actually has to be big enough to matter. A country must have at least 5 qualifying massive companies to even be considered.
Economic Health: They look at the country’s creditworthiness and make sure its average wealth (Gross National Income) meets specific safety tiers.
If a developing country passes all these tests, it proves it has the plumbing to handle global investment, and it earns a spot in the VEU basket.
The “What If” Worries: What if an Emerging Market crashes?
It’s completely normal to feel nervous when we are sending our money to a basket holding shares in places like China or Taiwan. What if one of those economies totally crashes?
This goes right back to my lesson about not chasing returns and relying on diversification. Because VEU includes nearly 3,900 companies across 46 countries, it is incredibly resilient. If the Chinese economy has a terrible year and their share market drops, it will definitely sting a bit. But at the exact same time, the companies in Japan, Switzerland, or the UK might be having a record-breaking year, which balances out the drop.
For VEU to go to zero, almost 4,000 of the biggest companies outside the US would all have to go bankrupt at the exact same time.
The Nitty-Gritty: Fees and Performance
This is where VEU really shines for everyday DIY investors like us.
The Cost (MER):
VEU has a Management Expense Ratio (MER) of just 0.04% p.a.
That is ridiculously cheap. For every $10,000 I have invested, I am charged a microscopic $4 a year. Being able to buy nearly 4,000 companies across the globe for less than the cost of a cup of coffee is honestly one of the best deals I’ve found in investing.
The Performance:
Here is what the total returns have looked like recently:
Note: As I learned the hard way, the stock market goes up and down, and past performance doesn’t guarantee future results. I don’t hold it just for these past numbers; I hold it for the future peace of mind.
If IVV / VGS is the American engine of my portfolio, VEU is the rest of the car. Even with the slight overlap with my other funds, holding VEU means I own a tiny piece of the entire global economy. I don’t have to worry about chasing the highest percentage returns or guessing where the next big tech boom will happen; I just buy the whole world, sit back, and let it run.
And I genuinely thank my readers for encouraging me to keep doing these posts as it does take significant amount of time and it’s my labor of love. I will continue doing this as long as practically possible or until I run out of ideas.
The birth of this post is out of my curiosity on understanding my own portfolio a bit deeper and better. And the series of question and answer style in this post is a result of a curated questions with AI in the morning.
If you’ve read this far - and if you want to jump on this asset - I’d still urge you to consider below - before hitting that buy button of VGS.
Don’t have any credit card debts - as no matter how much the fund of your investment grows there is a bigger hole in your bucket if you hold credit card debt as that will be close to 20+% and it’s a blood sucking parasite. So, pay that off first.
Have sufficient amount of cash that you are comfortable enough to have in your emergency reserves - so that you don’t panic sell when the market does it’s “drunkard” behaviour.
And I don’t know your personal situation and circumstances and or your investment objectives - so, consider them before making this decision. This post is not a financial advice by any means. Consider this as an educational post.
Pearler referral link: And if you are new to investing and want to take a dip - here is my pearler link - this is the one that I use for my ETF purchases. If you are using this link - this doesn’t get me anything except for buying one free purchase of an ETF in the following month. So, thank you!