SPDR S&P 500 ETF Trust vs. Vanguard Total World Stock ETF: Which One Is the Better Buy for Long-Term Investors?

Do you view the market's recent weakness as a buying opportunity? Maybe a chance to step into a new position in a broad-based index fund at a discounted price? If so, good idea! Even if we haven't hit the ultimate bottom yet, stocks are certainly on sale here.

But which fund? The SPDR S&P 500 ETF Trust (NYSEMKT: SPY) and the essentially identical Vanguard S&P 500 ETF (NYSEMKT: VOO) are always popular choices. If you've got the option of buying anything though, maybe something with a bit more international exposure like the Vanguard Total World Stock ETF (NYSEMKT: VT) is a better option right now.

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Exactly what it sounds like

Just as the name suggests, the Vanguard Total World Stock ETF owns stocks of companies located all over the planet. Built to mirror the FTSE Global All Cap Index, this exchange-traded fund (ETF) holds stakes in over 10,000 equities of all shapes and sizes, many of which you've likely never even heard of.

Roughly two-thirds of this ETF's value consists of North American companies (most of which are U.S. listings), while European stocks account for 15% of its holdings. Meanwhile, Asia-Pacific names and emerging markets each make up about 10% of VT's portfolio. Said another way, about one-third of this fund's value consists of stocks that aren't in the S&P 500.

Great. But given that the U.S. economy and market have been outperforming most others of late, why fix what isn't broken? Because nothing is ever permanent; change happens. There's an argument to be made, in fact, that we're on a precipice of a major shift in the planet's leading names.

And Vanguard's analysts are making this very argument. In its recently published 2026 Economic and Market Outlook, Vanguard's Global Chief Economist and Global Head of Investment Strategy Joe Davis comments that "despite the glamor of the tech-heavy U.S. equity market, more compelling investment opportunities are emerging in high-quality fixed income, U.S. value, and ex-U.S. equity -- even for those investors most bullish on AI's prospects." His bottom line? "Long-term investors will continue to benefit from a portfolio consisting of fixed income and globally diversified equities."

It's not just Vanguard that's more bullish on anything other than the U.S. growth stocks that have been driving the S&P 500 higher, however. Bank of America/Merrill Lynch Chief Global Strategist Michael Hartnett feels the same. Explaining that "AI disruption [is] more labor market and/or corporate revenue negative to services-heavy US GDP & SPX [S&P 500] index than manufacturing/resource-heavy EAFE/EM [Europe/emerging markets] macro & equity indices," Hartnett expects the U.S. market to lag most other region's markets through the end of the decade.

A strategically sound option at this time

The Vanguard Total World Stock ETF isn't necessarily the only way to plug into this shift in global market leadership. The Vanguard Total International Stock ETF (NASDAQ: VXUS) specifically doesn't hold any U.S. stocks, which are expected to underperform for the foreseeable future. Neither does the Vanguard FTSE All-World ex-US ETF (NYSEMKT: VEU). These alternatives would both be great plays if you're looking to capitalize on the brewing shift in market leadership, or a smart addition if you already own SPY or VOO.

If you currently don't own any broad index funds and just want to take advantage of the recent marketwide pullback, VT is a better overall bet than the SPDR S&P 500 ETF Trust is at this time.

Bank of America is an advertising partner of Motley Fool Money. James Brumley 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 ETF, Vanguard S&P 500 ETF, and Vanguard Total International Stock ETF. The Motley Fool has a disclosure policy.