Many passive investors prefer to hold only a single global ETF. Should you hold a global ETF? I'll summarize my opinion, research, and experience in this article 😉
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⚠️ This article is not investment advice. The content of this article should be considered for entertainment purposes only. Investing carries risks of losing money!
What is an ETF?
👉 An ETF is a financial investment in a set of stocks!
With the majority of ETFs, the objective is to track the performance of an underlying asset.
For example, by purchasing an S&P 500 ETF, the investor blindly follows the performance of the top 500 US stocks, without trying to beat the stock market.
In this case, for example, the SP500 ETF holds a percentage of each of the top 500 US stocks. In reality, each stock has a weight in the ETF proportional to its value and market capitalization.
This stock market strategy is known as a passive strategy. Because the shareholder only owns stock market assets and hopes that the value of the portfolio increases over the years.
What is a Global ETF?
👉 In reality, a global ETF is a collection of stocks worldwide.
As a general rule, a global ETF has stocks in 5 continents. For example, in the USA, Canada, France, Australia, India or Brazil.
The goal is to track global stock market performance! How? By tracking the major stock market indices of each country the ETF invests in. For example, the CAC 40 in France, the SP500 in the USA, the SMI in Switzerland, the DAX in Germany, etc.
Therefore, as I write these lines, With a global ETF, it is possible to own the world's most reputable stocks ! For example, Apple in the USA, Air Liquide in France, Nestlé in Switzerland or Alibaba in China.
Management fees for a Global ETF?
👉 The management fee of an ETF, also known as TER, is an annual fee that the ETF charges for the development of the ETF.
For example, if the TER is 0.10% and the shareholder holds an ETF at $1,000 (or other monetary currency), the client will pay $1 per year.
🔍 In reality, the higher the TER, the more money the customer loses that he will never be able to recover. ⚠
The TER commission for a global ETF varies greatly depending on the investment fund.
According to my research, the TER for a Global ETF is variable between 0.06% to 0.45%. However, Most global ETFs have TER fees between 0.10% to 0.25%.
👉 Therefore, choosing a solid global ETF with a cheap TER fee (-0.15%) is essential for a stock market investor's finances.
Why is there a large percentage of US stocks in a Global ETF?
👉 Almost all ETFs that invest globally hold a majority of US stocks, tracking the US stock index, the SP500.
When I say that the majority of the overall stock portfolio follows the SP500, that's a really big portion!
🔍 Indeed, The US stock index is almost always the top position in a global ETF. A very large portion of the stock portfolio! Typically, US stocks represent more than 60% of a global ETF's stock portfolio.
Other countries, which represent less than 40% of the stock portfolio, are divided into small investment percentages per country.
For example, here is the distribution of countries invested by ETF global VT1
In this case, we conclude that the first stock index (USA) has more than 63% of the ETF. The remaining 37% of the portfolio is divided into dozens of countries with small percentages.
In fact, it's no coincidence that the US stock market dominates a global ETF. By such large percentages!
As I write these lines, The US stock market is the largest in the worldIn fact, the majority of stocks with the highest market capitalization in the world belong to the American stock market.
The performance of a US stock index?
If we analyze past stock market performance, over a period of more than 3 years, It will be very difficult to find a foreign stock exchange that has performed as well as the US stock exchange.
For example, as I write this, the US stock market is in sharp decline, yet if I look at the VOO ETF that tracked the SP500, the stock market performance is:
- 122% in 5 years
👉 We conclude that, despite the fact that the US stock market is suffering at the time of writing this article (due to speculation about Trump's taxes). Looking back over the past five years, the US stock market performance, with the S&P 500 index, remains above 120%. This is a remarkable performance!
The performance of other stock indices?
🔍 Based on Vanguard's VT Global ETF, the top 5 countries invested in are:
- USA (+ 63% of the stock portfolio)
- Japan (5.5%)
- United Kingdom (- 4%)
- China (- 4%)
- Canada (- 4%)
Then, I compared on zonebourse, the performance of the reputable stock indices in the top 5 countries invested, from March 2015 to March 2025, in order to compare the past performance of each stock index.
👉 We conclude that the US stock index (in blue) was the best-performing stock index among the top 5 countries invested in the VT Global ETF. And by far!
For example, the second best-performing stock index (Japan) achieved "only" half the return of the US. As for the return of other stock indices, they are far behind the US stock index!
Therefore, based on past performance (⚠️ Past performance is not a guarantee for the future), it makes sense to favor a global ETF with a large percentage in a US stock index.
Should you own a global ETF?
ETF SP500 VS ETF Global?
If we analyze the past performance until March 2025, here is the performance of the last 5 years (as of the day I am writing this article) between an S&P 500 VOO ETF (in blue) compared to a Global VT ETF (in red).
👉 We conclude that despite very similar yield curves, over the last 5 years the SP500 (in blue) has obtained 122%, while the Global VT ETF has obtained “only” 89%.
🔺If we analyze over a 10-year period (March 2015 to March 2025), the performance of the SP500 is even more pronounced!
👉 In this case, we conclude that the SP500 (in blue) increased its performance to 172% in 10 years (50% more compared to before), while the Global VT ETF, maintained the performance at 89% in 10 years.
Why doesn't a Global ETF perform like an SP500 ETF?
It's quite logical actually.
As we have analyzed previously, a global ETF is also composed of stock indices that perform less well than the S&P 500 (⚠️ if we analyze past performance).
🔍 Therefore, until the day of writing this article, Compared to the US SP500, other stock indices lower the ETF's overall performance.
Is it better to favor an SP500 ETF than a global ETF?
Each shareholder will have a different point of view.
👉 If we compare a global ETF with a US SP500 ETF, a global ETF is more diversified when we analyze the global territory. Indeed, owning a global ETF means holding stocks in all four corners of the world.
Additionally, arguably, owning a global ETF with stocks worldwide reduces the ETF's price fluctuation compared to owning stocks in just one country.
👉 However, it's important to remember that many US stocks sell their products worldwide, such as Coca-Cola and Apple. Therefore, when analyzing global diversification, it's questionable.
If we analyze the performance, from a historical point of view (until March 2025), an S&P 500 ETF is more profitable than a global ETF over the long term!
👉 Another financial aspect, some investors are sensitive to the fact that the ETF also invests in their country of residenceFor example, if a Swiss citizen invests in the VT global ETF, he is happy that his investment contributes to the development of the Swiss economy.
To conclude, if the shareholder hesitates between the 2 stock market strategies, note thatit is not impossible to hold both ETFs (SP500 + Global) in your stock market portfolioIf the investor wants it, why not?
How to choose a good global ETF?
👉 In my opinion, you should go to your favorite ETF comparator.
For example, my favorite ETF comparator at the time of writing this article is stock analysis.
🔍 Regarding the main filters for a Global ETF, I would put:
- TER management fees = – 0.15%
- 5-year return on investment = minimum 50%
- Region = Global
- Sector = total market
- Volume = Greater than 100,000
Indeed, I think these 5 filters are a good start to choosing your overall ETF. Although you need to analyze other aspects as well 😉
How to choose a good investment fund for a global ETF?
Every investor will have their own opinion on this subject.
In my opinion, which is not investment advice, I am a fan of the investment fund iShares, Vanguard and Invesco. But there are also other interesting investment funds.
👉 Therefore, in order to own a Global ETF, at the time of writing this article, I would choose 1 of these 3 investment funds (⚠️ not investment advice).
- Vanguard VT (TER 0.06%, domiciled in the USA)
- Invesco FWRA (TER 0.15%, domiciled in Ireland)
- SSAC of iShares (TER 0.20%, domiciled in Ireland)
Should you own a global ETF?
Conclusion
👉 A global ETF can be a serious ETF to add to your financial portfolio.
Indeed, owning a global ETF means investing in the best stocks of the moment worldwide.
The past performance of a Global ETF (without being a guarantee of future performance) is rather interesting.
For example, from March 2015 to March 2025, the cumulative percentage for the VT Global ETF was +135% over 10 years (including dividends). That is, approximately 8.9% annualized over 10 years.
👉 In my opinion, a Global ETF does not have an exceptional past performance, however, I believe that some Global ETFs have achieved very good performance in the past. Plus, with global diversification!
If you buy a Global ETF, remember to choose a solid, reputable fund with an acceptable TER fee and a good performance history.
In my opinion, among other aspects to analyze, a global ETF must:
- Request a TER commission of less than 0.15 %.
- Having a trusted investment fund, in my opinion I like Vanguard, iShares or Invesco funds.
- Regarding past performance, I believe a global ETF should have at least 50% of profit over the past 5 years.
- Invest in all sectors and all over the world
Should you own a global ETF?
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Should you own a global ETF?
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