<div id="readability-page-1"><div> <h2>Key Points</h2><ul><li>Both small-caps and international stocks are trading at steep discounts to the S&amp;P 500.</li><li>The Vanguard All-World ex-U.S. Small-Cap Index ETF invests in a broad index of international small-cap stocks. </li><li>This can be a great way to get broad small-cap exposure without being too reliant on any single company. </li><li>10 stocks we like better than Vanguard FTSE All-World ex-US Small-Cap ETF ›</li></ul>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 &#34;Indispensable Monopoly&#34; providing the critical technology Nvidia and Intel both need. Continue »<img src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-dXJsPWh0dHBzOi8vZy5mb29sY2RuLmNvbS9lZGl0b3JpYWwvaW1hZ2VzLzg2NjAzMS93b3JsZC1tYXAtMjAyNC5qcGcmdz03MDA?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="700" height="467" original-src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-dXJsPWh0dHBzOi8vZy5mb29sY2RuLmNvbS9lZGl0b3JpYWwvaW1hZ2VzLzg2NjAzMS93b3JsZC1tYXAtMjAyNC5qcGcmdz03MDA"/>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.<h2>What the Vanguard All-World ex-U.S. Small-Cap Index ETF owns</h2>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&amp;P 500, where 38% of the fund's assets are concentrated in just 10 of the holdings.<h2>A cheap way to buy cheap stocks</h2>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&amp;P 500 index.<h2>Should you buy stock in Vanguard FTSE All-World ex-US Small-Cap ETF right now?</h2> 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&amp;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. </div></div>

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.

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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