--- title: "This Dirt-Cheap ETF Covers Small-Cap Stocks From Both Developed and Emerging Markets. Here Is Why That Combination Could Be One of the Best Long-Term Diversifiers Right Now" type: "News" locale: "en" url: "https://longbridge.com/en/news/283493436.md" description: "The Vanguard FTSE All-World ex-U.S. Small-Cap Index ETF offers exposure to international small-cap stocks, currently trading at attractive valuations compared to large-cap stocks. With a low expense ratio of 0.06%, it provides a cost-effective way to diversify investments across approximately 4,950 small-cap companies globally. The ETF's portfolio is geographically diverse, with significant holdings in Europe, Asia-Pacific, and emerging markets. However, analysts suggest considering other stocks for potentially higher returns, as the ETF was not included in a recent top stock recommendation list." datetime: "2026-04-21T11:50:32.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/283493436.md) - [en](https://longbridge.com/en/news/283493436.md) - [zh-HK](https://longbridge.com/zh-HK/news/283493436.md) --- # This Dirt-Cheap ETF Covers Small-Cap Stocks From Both Developed and Emerging Markets. Here Is Why That Combination Could Be One of the Best Long-Term Diversifiers Right Now ## Key Points - Both small-caps and international stocks are trading at steep discounts to the S&P 500. - The Vanguard All-World ex-U.S. Small-Cap Index ETF invests in a broad index of international small-cap stocks. - This can be a great way to get broad small-cap exposure without being too reliant on any single company. - 10 stocks we like better than Vanguard FTSE All-World ex-US Small-Cap ETF › Small-cap stocks are trading at extremely cheap valuations relative to their large-cap counterparts right now. International stocks are trading at a discount relative to U.S.-listed stocks. The **Vanguard FTSE All-World ex-U.S. Small-Cap Index ETF** (NYSEMKT: VSS) allows you to capitalize on both attractive stock market categories. As the name suggests, this ETF invests in small-cap stocks, with exposure to international companies. _**Will AI create the world's first trillionaire?** Our team just released a report on the one little-known company, called an "Indispensable Monopoly" providing the critical technology Nvidia and Intel both need. **Continue »**_ Image source: Getty Images. This ETF could be an excellent addition for patient, long-term investors, and in this article, we'll take a closer look at its investment portfolio and the important information investors should know. ## What the Vanguard All-World ex-U.S. Small-Cap Index ETF owns While the ETF's official name is certainly a mouthful, the short description is that it is an international small-cap ETF. This means it invests in smaller companies (average market cap of $2.1 billion) located outside the United States, or internationally. It's worth clarifying that a _global_ ETF (which this is not) invests in both domestic and international stocks, whereas an international ETF invests only in non-U.S. companies. In all, the ETF owns about 4,950 small-cap stocks. Only about 11% of the portfolio is based in North America (mostly Canada), with the rest comprised of international stocks. 33% of the companies are European, 27% are located in developed countries in the Asia-Pacific region, and 28% are in emerging markets. This ETF is highly geographically diverse. It's also important to mention that, unlike many index funds, the Vanguard All-World ex-U.S. Small Cap ETF doesn't have large positions in any particular stocks. In fact, no individual stock in the portfolio makes up 0.23% of the ETF's total assets. Compare this with the S&P 500, where 38% of the fund's assets are concentrated in just 10 of the holdings. ## A cheap way to buy cheap stocks Vanguard ETFs are known for their low investment expenses, and this one is no exception. The Vanguard FTSE All-World ex-U.S. Small-Cap ETF has a 0.06% expense ratio, which means that for every $10,000 in assets, your annual investment fees will be just $6. To be clear, this isn't a fee you have to pay -- it will simply be reflected in the ETF's performance over time. This ETF can be a great way to get broad exposure to international small-cap stocks, especially at its current price. The average stock in the portfolio trades for just 1.6 times book value -- significantly less than the 2.1x price-to-book ratio of the domestic Russell 2000 small-cap index, and _far_ below the 4.8 average P/B of the large-cap S&P 500 index. ## Should you buy stock in Vanguard FTSE All-World ex-US Small-Cap ETF right now? Before you buy stock in Vanguard FTSE All-World ex-US Small-Cap ETF, consider this: The _Motley Fool Stock Advisor_ analyst team just identified what they believe are the **10 best stocks** for investors to buy now… and Vanguard FTSE All-World ex-US Small-Cap ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when **Netflix** made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, **you’d have $524,786**!\* Or when **Nvidia** made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, **you’d have $1,236,406**!\* Now, it’s worth noting _Stock Advisor’s_ total average return is 994% — a market-crushing outperformance compared to 199% for the S&P 500. **Don't miss the latest top 10 list, available with _Stock Advisor_, and join an investing community built by individual investors for individual investors.** **See the 10 stocks »** _\*Stock Advisor returns as of April 21, 2026._ _Matt Frankel, CFP has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Vanguard FTSE All-World ex-US Small-Cap ETF. The Motley Fool has a disclosure policy._ The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. ### Related Stocks - [VSS.US](https://longbridge.com/en/quote/VSS.US.md) - [.SPX.US](https://longbridge.com/en/quote/.SPX.US.md) - [NVDA.US](https://longbridge.com/en/quote/NVDA.US.md) - [INTC.US](https://longbridge.com/en/quote/INTC.US.md) - [NFLX.US](https://longbridge.com/en/quote/NFLX.US.md) - [NDAQ.US](https://longbridge.com/en/quote/NDAQ.US.md) - [NVD.DE](https://longbridge.com/en/quote/NVD.DE.md) ## Related News & Research - [VTI vs VOO: Which One Is the Smarter Buy Today?](https://longbridge.com/en/news/286892263.md) - [New Core Equity ETF Drops As Low-Cost Active Funds Become Wall Street's New Obsession](https://longbridge.com/en/news/287253853.md) - [$1000 Invested In Vanguard S&P 500 Growth ETF 15 Years Ago Would Be Worth This Much Today](https://longbridge.com/en/news/286797286.md) - [$100 Invested In iShares S&P 500 Growth ETF 20 Years Ago Would Be Worth This Much Today](https://longbridge.com/en/news/286800978.md) - [The High-Yielding Vanguard ETF That Belongs in Every Investor's Portfolio](https://longbridge.com/en/news/286938492.md)