VSS tracks the FTSE Global Small-Cap ex-US Index, which provides exposure to 3,200 small-cap global companies taken from 43 countries. Looking at international small-caps’ risk profile, smaller companies are not much more volatile than their larger counterparts. For instance, the standard deviation for the FTSE Global Small Cap ex-US Index was 17.6% over the trailing five years, whereas the FTSE All World ex US Index showed a standard deviation of 16.6%.
However, potential investors should be aware that VSS does not hedge currency risks. Consequently, if foreign currencies continue to depreciate against the U.S. dollar, the international ETF’s USD-denominated returns may be lower.
Vanguard FTSE All World ex-US Small-Cap ETF
Tom Lydon’s clients own shares of IWM.