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Vanguard ETFs Shine with Focus on International Stocks in 2025

Vanguard's international ETFs are outperforming U.S. stocks, with top funds achieving returns of over 12% this year. This trend reflects better valuations and economic data from Europe, positioning these ETFs as attractive investment options.

Date: 
AI Rating:   7
International ETFs Gain Traction
The report highlights the strong performance of Vanguard's international ETFs, specifically the Vanguard FTSE Europe ETF (VGK), Vanguard International High Dividend Yield ETF (VYMI), and Vanguard FTSE Developed Markets ETF (VEA), with returns of approximately 12%, 10%, and 8% respectively year-to-date.

**Earnings Potential**
The report compares the P/E ratio of the Vanguard FTSE Europe ETF at 17.4 to the Vanguard S&P 500 ETF, which trades at a substantially higher P/E ratio of 26.9. This indicates that investors may find European stocks to be more attractively valued compared to their U.S. counterparts.

**Market Trends**
The anticipated increase in defense spending by European Union countries, particularly Germany, contributes positively to the performance of European defense stocks, which have shown notable gains. The overall economic data from Europe has exceeded expectations, affecting sectors such as banking, manufacturing, and services. This broad-based economic improvement can positively impact the earnings outlook.

**Risks and Volatility**
However, the report warns of potential risks stemming from trade tensions between the U.S. and Europe, as well as potential setbacks in the geopolitical landscape involving Russia and Ukraine. Such factors could negatively impact market sentiment and, by extension, the valuations of these international ETFs.

In summary, Vanguard's focus on international stocks is yielding dividends, benefitting from both favorable economic conditions and comparatively attractive valuations. Professional investors may find these emerging trends noteworthy, but must also remain vigilant regarding external geopolitical and economic impacts that could influence future performance.
Stocks:  VGK VYMI VEA