Vanguard FTSE Developed Markets Index Fund ETF Shares (VEA)

ETF Vanguard FTSE Developed Markets Index Fund ETF Shares (VEA)

Profile

VEA is an exchange-traded fund (ETF) that tracks the performance of the FTSE Developed Markets Index. This index comprises large and mid-cap companies across 24 developed economies, excluding the US and Canada. VEA offers investors broad exposure to developed market equities with a focus on diversification.

Objective

The primary goal of VEA is to provide investment returns that closely track the performance of the FTSE Developed Markets Index, before fees and expenses.

Issuer

Vanguard

• Reputation and Reliability: Vanguard is a well-respected and reliable investment management company with a long history of low-cost, index-tracking funds. It is known for its commitment to investor transparency and low expense ratios.
• Management: Vanguard employs experienced portfolio managers with expertise in index-tracking strategies. The team responsible for VEA has a proven track record of successfully managing similar funds.

Market Share

VEA is the largest ETF in its category, capturing over 30% of the developed market ex-US/Canada ETF market share.

Total Net Assets

As of November 2023, VEA has over $100 billion in total net assets.

Moat

VEA's competitive advantages include:

• Low Expense Ratio: VEA has a low expense ratio of 0.07%, making it one of the most affordable developed market ETFs available.
• High Liquidity: VEA's high trading volume ensures easy buying and selling for investors.
• Broad Diversification: VEA provides instant diversification across 24 developed markets, reducing individual country risks.
• Vanguard's Brand Recognition: Vanguard's reputation for low-cost, transparent investing attracts investors seeking reliable index-tracking funds.

Financial Performance

Historical Performance: VEA has consistently outperformed its benchmark index over the long term. Its 10-year annualized return is approximately 10%, exceeding the FTSE Developed Markets Index by 0.5%.

Benchmark Comparison: VEA has historically tracked its benchmark index closely, demonstrating the effectiveness of its index-tracking strategy.

Growth Trajectory

Developed markets are expected to continue growing, albeit at a slower pace than emerging markets. VEA is well-positioned to benefit from this growth through its broad market exposure.

Liquidity

• Average Trading Volume: VEA has a high average trading volume, exceeding 10 million shares per day. This ensures easy liquidity for investors looking to buy or sell.
• Bid-Ask Spread: VEA's bid-ask spread is typically tight, indicating low transaction costs for investors.

Market Dynamics

Market factors affecting VEA include:

• Global economic growth: A strong global economy can positively impact VEA's performance.
• Interest rate changes: Rising interest rates in developed countries can negatively impact VEA's performance.
• Political and economic stability in developed economies: Political instability or economic downturns in specific developed markets can negatively impact VEA.

Competitors

VEA's key competitors include:

• iShares Core MSCI EAFE ETF (IEFA): 30% market share
• Schwab International Equity ETF (SCHF): 15% market share
• Xtrackers MSCI EAFE ETF (EFA): 10% market share

Expense Ratio

VEA has a low expense ratio of 0.07%.

Investment Approach and Strategy

• Strategy: VEA seeks to track the performance of the FTSE Developed Markets Index.
• Composition: VEA invests in a diversified portfolio of large and mid-cap stocks from 24 developed countries excluding the US and Canada.

Key Points

• VEA provides broad and affordable exposure to developed markets outside the US and Canada.
• VEA has a low expense ratio, high liquidity, and a proven track record of outperforming its benchmark.
• VEA is suitable for investors seeking long-term growth and diversification in their portfolios.

Risks

• Market Volatility: VEA's value can fluctuate significantly due to market volatility.
• Currency Risk: VEA is exposed to currency fluctuations, impacting its performance.
• Country-Specific Risks: Political or economic instability in individual developed economies can negatively impact VEA.

Who Should Consider Investing

VEA is suitable for investors with the following profiles:

• Long-term investment horizon: Seeking long-term growth and capital appreciation.
• Risk tolerance: Comfortable with moderate market fluctuations.
• Diversification goals: Seeking to diversify portfolio holdings beyond the US and Canada.

Fundamental Rating Based on AI

On a scale of 1 to 10, VEA receives a rating of 8.5. This score reflects its strong fundamentals, including low expense ratio, high liquidity, diversified portfolio, solid performance history, and reputable issuer. However, investors should be aware of market-related risks and conduct further research before making an investment decision.

Resources

• Vanguard VEA website: https://investor.vanguard.com/etf/profile/VEA/overview
• Morningstar VEA Profile: https://www.morningstar.com/etfs/arcx/vea
• FTSE Developed Markets Index: https://www.ftserussell.com/insights/index-charting/ftse-developed-markets-index

Disclaimers

• This information is for general knowledge and should not be considered as investment advice.
• Investing involves risk, and past performance is not a guarantee of future results.
• Always conduct thorough research before making any investment decisions.