Thinking Beyond U.S. Stocks? This Global ETF Provides Access to Worldwide Opportunities.

U.S. stocks have done very well for the past 15 years. According to research by Dodge & Cox, U.S. stocks outperformed international stocks by over 500% from 2010 through last year.

Yes, the United States is an economic juggernaut and a pillar of the world's economy. That said, the U.S. stock market is near its highest valuation on record, leaving a significant valuation gap between U.S. and international stocks.

But investing in non-U.S. companies isn't easy for most. That's where an exchange-traded fund (ETF) comes in. The Vanguard Total International Stock ETF (NASDAQ: VXUS) is a basket of more than 8,400 non-U.S. stocks.

Here is why it's arguably the best way for investors to expand their portfolios beyond America's borders and why they may want to consider doing so.

Image source: Getty Images.

Why get into international stocks now?

The U.S. stock market has enjoyed a remarkable run. The S&P 500 index has risen by 66% over the past three years alone! That said, non-U.S. stocks have begun to build momentum this year. In fact, the Vanguard Total International Stock ETF has risen by 24% since January, outperforming the S&P 500 by 10 percentage points.

So, what gives? The S&P 500 has rallied on investor enthusiasm for artificial intelligence (AI), especially among the mega-cap technology companies, known as the "Magnificent Seven" stocks. But the index now sits near its highest valuation on record.

In investing, no single strategy works all the time. Different types of stocks, market sectors, or even asset classes take turns performing well, often depending on investor sentiment and economic conditions at any given time. The pendulum has swung very far in the direction of U.S. stocks since 2010.

Now, that could be starting to swing back in the other direction. On the one hand, U.S. stocks have almost never been this expensive. On the other hand, non-U.S. stocks are well within their historical norms. It's like two stereos, one turned up as loud as it can go while the other is at only half volume.

There are plenty of remarkable companies outside of the United States

Many of the world's most prominent companies operate in the United States. That includes the Magnificent Seven companies, which collectively generate hundreds of billions of dollars in cash flow each year, and they are among the leading AI companies today.

Yet, that doesn't mean that there aren't exceptional businesses in other countries. Look at the Vanguard Total International Stock ETF's top 10 holdings, and you'll see some very recognizable companies:

1. Taiwan Semiconductor Manufacturing
2. Tencent Holdings
3. ASML Holding
4. Alibaba Group
5. Samsung Electronics
6. SAP
7. AstraZeneca
8. HSBC Holdings
9. Nestlé
10. Novartis

Taiwan Semiconductor and ASML are two mission-critical companies for manufacturing all the chips used in data centers and AI. Tencent and Alibaba are the big tech companies of China, the world's most populous country. Additionally, you have leading electronics, software, food, banks, and healthcare companies in this list.

Some of these companies don't list their stocks on U.S. exchanges, so an ETF such as this is often the easiest way to invest in them.

Why the Vanguard Total International Stock ETF stands out from the crowd

There are thousands of ETFs to choose from out there, so you'll have a wide selection of international ETFs to choose from, too. So, why should you consider the Vanguard Total International Stock ETF out of all of them?

For starters, Vanguard is one of the world's leading investment fund companies, with decades of history, and it is a trusted name in its industry. Additionally, the company's ownership is spread across its funds, helping prevent potential conflicts of interest.

Next, the ETF has a low expense ratio of just 0.05%, or $0.50 on a $1,000 investment. That means you keep almost all your money and the returns it generates while invested. Plus, with a minimum investment of only $1, it's suitable for investors working on almost any budget.

I'm not advocating that people abandon the S&P 500 or other U.S. stocks. U.S. stocks have performed well for generations, and even though the future isn't guaranteed, it's probably best to count on U.S. stocks helping you build wealth for as long as America is...America.

But as they say, you shouldn't put all your eggs in one basket. Investors can help diversify their portfolios by adding high-quality non-U.S. stocks, and this ETF could be the best way to do so.

HSBC Holdings is an advertising partner of Motley Fool Money. Justin Pope has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends ASML, Taiwan Semiconductor Manufacturing, Tencent, and Vanguard Total International Stock ETF. The Motley Fool recommends Alibaba Group, AstraZeneca Plc, HSBC Holdings, Nestlé, and SAP. The Motley Fool has a disclosure policy.