Core Viewpoint - U.S. small-cap stocks have underperformed recently, but the Vanguard FTSE All-World ex-US Small-Cap ETF (VSS) presents a compelling investment opportunity for the future, particularly as investors approach 2026 [1][3]. Group 1: Performance and Volatility - The Vanguard ETF has outperformed major U.S. small-cap indexes over the past three years while exhibiting significantly lower annualized volatility, challenging the notion that international funds are inherently more volatile [4]. - This ETF provides superior risk-adjusted returns compared to similar domestic funds, making it an attractive option for investors [5]. Group 2: Convenience and Diversification - The ETF simplifies investment by combining exposure to both developed and emerging markets, alleviating the burden of stock-picking for investors [6]. - Investing in international small-cap stocks helps reduce stock-level concentration and mitigates risks associated with focusing on a single geographic market [8]. Group 3: Cost Efficiency - The Vanguard ETF features a low expense ratio of 0.08%, significantly lower than the category average of 1.24%, making it a cost-effective choice for investors [9]. - International small-caps are trading at discounted valuations compared to U.S. counterparts, and they tend to be more profitable, which is noteworthy given that approximately 40% of Russell 2000 index companies are unprofitable [10]. Group 4: Geographic Exposure - About half of the ETF's geographic exposure is allocated to European and Japanese stocks, regions with lower interest rates compared to the U.S., which may benefit investors sensitive to interest rate fluctuations [11].