The Vanguard US Total Market Shares Index ETF (ASX: VTS) has gone through a significant decline in the last few weeks, similar to many exchange-traded funds (ETFs). The market has been worried by what's going on with the growing US trade war with other countries.
A significant jolt to the global economy isn't promoting investor resilience or confidence that global growth will improve in the shorter-term (or even for the foreseeable future).
However, there have been plenty of shocks before. Just in the last 20 years we've had the GFC, the COVID-19 pandemic and elevated inflation. In other words, it's not uncommon for the stock market to be thrown by an economic curveball.
With the VTS ETF down 13% since the end of January 2025, I think it's worthwhile considering whether it's the right time to invest.
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Global earnings
VTS fund has over 3,600 companies in its portfolio, which is a huge amount of diversification in one fund. Owning lots of businesses helps reduce risks of being too exposed to one business or sector.
But, I think something that's even more appealing about the VTS ETF's holdings is that a significant portion of the underlying earnings comes from other regions. If investors are worried about a US recession, then we can be reassured that companies like Apple, Alphabet, Nvidia and Microsoft are generating earnings from places like the UK, the EU, Asia, South America, Canada and Mexico.
While these businesses are listed in the US, it'd be a mistake to think of them as US-only businesses alone. The diversification of earnings may help mitigate any issues arising from the tariffs.
Future-focused
I think one of the most basic, but useful, ways to invest is to just focus on businesses that are likely to be generating higher profits in five years than they are today.
Good businesses in the US have shown an excellent ability to grow profit over the longer-term.
If companies are giving customers reasons to want to come back and spend again/more, then that's a powerful tailwind for earnings.
Companies like Microsoft and Alphabet are expecting to grow in numerous ways including cloud computing, AI, and so on. Other American companies are focused on different areas for growth such as semiconductors, gaming, VR and so on.
I think these companies are among the ones globally that are most likely to grow their earnings in the next few years because of their strength, global earnings diversification and excellent balance sheets.
Better valuation
It's not often that the VTS ETF falls by more than 10% If investors are willing to invest in US shares, or the global share market in general, I think this sell-off is an appealing time to look at ETFs focused on international shares.
While it's possible that the Vanguard US Total Market Shares Index ETF could fall further, we don't know that for sure without a crystal ball.
I think this could be an opportune time to invest for the long-term, though it's not the only ASX ETF or ASX share I've got my eyes on.
