International Stocks Fall Harder

In what has been a rough year for US stocks, international stocks are down even more.

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Through October, the Vanguard FTSE All-World ex-US ETF (VEU) is down 44% compared to the Russell 3000 Index Fund (IWV) which is down 33%.

VEU includes both developed and emerging markets with ownership stakes in 2,200 stocks across 47 countries outside of the US.  IWV owns the 3,000 largest US stocks.

US and International stocks were in synch through the first half of the year.  In August, International stocks started to sink hard while US stocks held on another month before the steep slides in September and October.

Having fallen harder, last week’s bounce back was also stronger for International stocks with VEU climbing nearly 15% compared to a 12% gain for IWV.

Historically, international stocks have been more volatile than US stocks.  For example, Vanguard uses the 3 year standard deviation, which looks at a the dispersion of a security’s last three years of monthly historical returns, as a benchmark for volatility. A higher standard deviation means a greater potential for volatility.

The 3 year standard deviation for the All-World ex-US ETF (VEU) is 16.46.  That compares to 11.52 for Vanguard’s Total Market ETF (VTI) which covers a universe similar to the Russell 3000.

See the ETF Directory for a complete listing of International ETFs.