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Vanguard's international ETFs crush U.S. markets with 25%+ gains in 2025

A historic shift is underway as Vanguard's low-cost global funds leave the S&P 500 in the dust. Could this mark the end of U.S. market dominance?

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2 min read
The image shows a pie chart on a white background with text that reads "Funds by Emerging Status,...
The image shows a pie chart on a white background with text that reads "Funds by Emerging Status, 2020-2021 Fiscal Year". The chart is divided into sections, each representing a different year, and the size of each section indicates the amount of funds that have been invested in each year.

Vanguard's international ETFs crush U.S. markets with 25%+ gains in 2025

Vanguard's international ETFs have surged ahead in 2025, beating U.S. markets by a wide margin. The Vanguard FTSE Europe ETF (VGK) and the Vanguard FTSE Developed Markets ETF (VEA) have both recorded gains of over 25% year to date, far outpacing the S&P 500. This shift comes as international stocks gain ground amid a weaker U.S. dollar and differing central bank policies. The Vanguard FTSE Europe ETF, tracking over 1,200 stocks across major European markets, has climbed 29% since January. Its top sectors include financials, industrials, and healthcare. With an expense ratio of just 0.06%, it remains far cheaper than the 0.81% average for comparable funds.

Meanwhile, the Vanguard FTSE Developed Markets ETF, covering more than 3,800 companies in developed economies, has risen 28% this year. Its largest holdings span financials, industrials, and consumer discretionary stocks. At 0.03%, its expense ratio is also well below the 0.85% industry norm. Both funds reflect Vanguard's reputation for low-cost, diversified investing—a legacy of founder John Bogle, who championed broad market exposure over stock-picking. The firm's dominance in index funds has only grown as international equities regain momentum. The composition of Vanguard's global ETFs has also evolved. In the Vanguard FTSE All-World UCITS ETF (VWCE), the top five holdings shifted from Nestlé, Roche, HSBC, and Shell in 2012 to Microsoft, Apple, Nvidia, Amazon, and Meta by April 2026. A similar trend appears in the Vanguard FTSE Developed World UCITS ETF (VEVE), where U.S. tech giants now dominate what was once a more balanced Euro-U.S. mix.

The strong performance of Vanguard's international ETFs highlights a broader trend: non-U.S. stocks are closing the gap after years of underperformance. Lower fees and diversified exposure continue to attract investors. With tech giants reshaping global indices, the shift suggests a lasting change in market leadership.

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