You've probably heard the case for global funds: They're a way to get U.S. and international exposure in one package. You may not know that they come in the form of exchange-traded funds: Last week, Vanguard launched the Total World Stock Index ETF (symbol VT), which tracks 2,900 large and midsize company stocks spread throughout 47 countries, including the United States. It charges annual fees of 0.25 percent.
The ETF, which is based on the FTSE All-World Index, is most exposed to developed markets, including the United States (which accounts for 41 percent of assets). Other developed countries, including the United Kingdom, Japan, France, and Germany, make up 47 percent of the index. (Emerging markets account for 12 percent.) Also worth noting: The index is weighted by market capitalization, which means larger companies receive greater representation.
Along with the ETF, Vanguard introduced a mutual fund that tracks the same index. The fund (symbol VTWSX) requires a $3,000 minimum investment and charges 0.45 percent in annual expenses.
So far, not many ETFs offer global exposure. Vanguard's competition includes the iShares MSCI ACWI Index fund (ACWI), which is based on the MSCI All Country World Index. It invests in roughly 700 companies in 39 countries and charges 0.35 percent annually.