1 Unstoppable Vanguard ETF to Buy Confidently With $350 Heading Into 2026

These days, $350 doesn't buy a whole lot, but for smart investors, that sum is enough to buy opportunity. It's enough to cover the cost of admission to some high-flying stocks and some opportunity-rich exchange-traded funds (ETFs) as investors edge closer to 2026.

Speaking of ETFs that merit a $350 (or more) allocation heading into 2026, there's a slew of them in the small-cap space. Before jumping in, investors may want to consider shedding domestic biases, because the landscape of international ETFs is home to some promising products.

The Vanguard FTSE All-World ex-US Small-Cap ETF (NYSEMKT: VSS) is part of that group. As of Oct. 31, $350 gets an investor about 2.5 shares of this fund -- a solid starting point for accessing a compelling, often-overlooked corner of the equity market. Let's get into the details regarding why this Vanguard ETF has the makings of a 2026 winner.

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Don't overlook opportunity with this ETF

As is often the case with domestic mid-caps, investors have a tendency to gloss over smaller stocks trading in markets outside the U.S. That's a curious phenomenon, particularly when considering this Vanguard ETF's track record. Over the past three years, the international-focused fund soundly outpaced the two major U.S. small-cap indexes, and did so with significantly less annualized volatility, allaying the common concern that non-U.S.-focused funds are more volatile than domestic equivalents.

The Vanguard ETF has a knack for providing investors with superior risk-adjusted returns relative to comparable domestic funds. Alone, that's an attractive selling point. But there are more interesting chapters in this book, and they could allay the concerns of the "past performance isn't a future indicator" crowd.

Another point in this ETF's favor is that it is both convenient and diverse. Its convenience is in eliminating the stock-picking burden and combining developed and emerging markets exposure under one roof.

The latter point would appear to speak to the international ETF's diversification properties, and it does. But small stocks from outside the U.S. serve other objectives, including reducing stock-level concentration and the potential risks of being focused on a single geographic market.

This international ETF is cheap in multiple ways

This Vanguard ETF lives up to the issuer's heritage of providing investors with low-cost exposure, even to international equities. Its expense ratio of 0.08%, or $8 in annual fees on a $10,000 position, is tiny compared to the category average of 1.24%.

That's not the only "cheap" box checked by this ETF. By some measures, international small-caps trade at discounted valuations relative to U.S. peers. Those more attractive multiples come with another perk: Broadly speaking, non-U.S. smaller companies are more profitable than comparable companies based in the U.S. That's something to consider at a time when roughly 40% of Russell 2000 index member companies lose money.

Lack of profitability is a big reason why smaller U.S. companies often need to raise capital, making them sensitive to interest rate fluctuations. Speaking of that, about half of the geographic exposure in this Vanguard ETF is directed to European and Japanese stocks -- regions where rates are lower than in the U.S.

Todd Shriber has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Vanguard International Equity Index Funds-Vanguard Ftse All-World ex-US Small-Cap ETF. The Motley Fool has a disclosure policy.