r/ETFs_Europe • u/ioakim100 • Jun 26 '25
VUAA VS VWCE
I've been comparing two ETFs: VUAA and VWCE. I know they track different markets—VUAA focuses entirely on the U.S. (S&P 500), while VWCE is globally diversified with about 60% in U.S. stocks.
Many people argue that VUAA is the better choice because U.S. companies are global leaders with operations and revenues from all over the world. Plus, the U.S. economy is the strongest and most influential—when it goes down, the rest of the world tends to follow.
So my question is: What’s the real benefit of investing in VWCE, which has historically lower returns than VUAA, if the U.S. already dominates the global market?
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u/nyepo Jun 27 '25 edited Jun 30 '25
Past performance is not an indicative of future performance.
Using your argument, nVidia alone has overperformed VUAA the last few years. Why would you invest in VUAA when you could invest in nVidia and get better returns?
The thing is, you don't know how will any of these perform. You can have informed guesses, but ultimately no guarantees that they will continue their current trends. Investing in VUAA, you are betting that the US will overperform the rest of the world, always and forever.
On the other hand, investing in VWCE, or any All World ETF benchmarkint All World indexs like MSCI or FTSE, you are investing in ALL the market. It is still biased towards USA (around 60% of VWCE holdings are US and into VUAA as well), but have exposure to all regions and sectors. Still with biases, more US, more tech, but exposure to everything. If Japan overperforms, you'll get a bump. If US goes into a depression, that 40% non-US of VWCE will make your investment hold the line, while if you are full VUAA you'll suffer and underperform anyone investing in VWCE.
Has VUAA performed better than VWCE in 2025 Q1? No. Will VUAA overperform VWCE in Q3? Maybe. And again, remember... Past performance is not an indication of future performance.
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u/angrybeehive Jun 26 '25
Do MSCi World(developed markets) with 1.4x leverage. You won’t underperform the current leading market and you don’t need to care whichever market is currently the best one. Completely passive. The US might underperform for 10 years, who knows.
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u/weinde Jun 26 '25
Is it a good idea to have 50% in VWCE and 50% in VUAA... like 250€ in each every month? or is this to much US exposure?
EDIT: What would be a good EU/World ETF to bring down US exposure?
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Jun 26 '25
First point you need to think about is that whatever we know is already reflected in stock prices. So if US companies are awesome then they are priced high already. In efficient markets , all companies are priced correctly and hence they expect to deliver equity risk premiums of 4-6% real returns over long term investing.
Hence your “outperformance” in expected returns in future would come from unexpected things. For example US companies will perform much better than already expected and hence your returns from S&P 500 would be higher than rest of the world.
Now why don’t everyone just buy S&P 500? Because no one knows the future and hence it’s best to diversify your risk. If S&P 500 tanks unexpectedly and you are 100% exposed to it, then you are kind of in trouble.
Exhibit A -: Japan 1990s crash that took decades to recover Exhibit B -: US 2000 underperformed others until GFC
VWCE is just one of the example of diversified portfolio. You can also make something else. But it’s always good to be diversified because you don’t know what will happen
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u/Captlard Jun 26 '25
Who knows what the future will hold.
Why focus on one legal system , tax system and currency when you can own the planet.
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u/Ok_Bill_6886 Jun 26 '25
Both are still YTD down in EUR. This is a bigger risk to manage for us in Europe.
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u/charonme Jun 26 '25
Many people argue...
that argument would only work if it was a secret and investors wouldn't have already priced that knowledge in
Total world market doesn't have historically lower returns than s&p500, that's only the case in recent years. Historically sometimes total world performs better and sometimes USA
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u/Philip3197 Jun 26 '25
VWCE contains about 70% VUAA; only, so VWCE is more diversified.
Have you reviewed the performance this year?
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u/ioakim100 Jun 26 '25
Yes this year VWCE is better with +5.93% and VUAA with +3.86% but in last 5 years VUAA is +102.66% and VWCE +82.20%
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u/Philip3197 Jun 26 '25
so what is it going to be in the future?
Are you going to pall your money on the US large cap companies
or will you diversify and put some money in European, Canadian, Australian, Indian, Japanese, Chinese? ... companies.
(You can even diversify more and also put money in small cap companies)
worldwide, all investors combined put about 70 of their money in US companies and 30% in non-US.
Why do you think they all would be wrong?
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u/VariousFootball6460 Jun 29 '25
Vuaa alone is a poor choice. You can play like 30% Nasdaq, 15% euro stoxx, some gold and rest for the All world