Market Meltdown Coming? These 2 ETFs Are Ready to Surge If Stocks Tank

Core Insights - The U.S. stock market has shown significant gains over the past decade, but there are increasing signs of a potential downturn due to persistent inflation, high interest rates, and geopolitical tensions [1] - Analysts highlight overvalued tech stocks and slowing consumer spending as major concerns for the S&P 500 [1] Investment Strategies - In a scenario where U.S. indices drop by 20% or more, diversification is crucial, with opportunities outside the U.S. potentially offering better growth and lower valuations [2] - This strategy serves as a hedge against prolonged declines in U.S. markets, although it does not guarantee profits [2] Vanguard FTSE Developed Markets ETF (VEA) - VEA is a low-cost investment option for those seeking stability outside the U.S., tracking the FTSE Developed All Cap ex US Index and holding over 4,000 stocks from developed economies [3] - The ETF excludes emerging markets and focuses on established firms, with top holdings including ASML Holding, SAP, and Novo Nordisk, ensuring no single stock exceeds 1.5% of the fund [4] Performance Analysis - VEA's geographic diversification reduces its correlation to U.S. market events, evidenced by its smaller decline of 14% during the 2022 market dip compared to the S&P 500's 19% drop [5] - Over the past year, VEA achieved a total return of 22%, outperforming the Vanguard S&P 500 ETF's 15.5%, driven by strong performance in Japanese equities and steady gains in Europe [6] - However, over a three-year period, VEA's cumulative returns of 77% lag behind VOO's 87%, with VOO being more susceptible to risks due to its heavy reliance on tech giants [7]