Vanguard FTSE Developed Markets ETF Trades 35% Below Five-Year P/E Average
VEA•The Vanguard FTSE Developed Markets ETF's trailing P/E ratio is 11.4, 35% below its five-year average of 17.6, while its forward P/E of 9.4 suggests anticipated earnings growth. The fund's 8.8% aggregate earnings yield offers a 4.4 percentage-point premium over the 10-year US Treasury.
1. Valuation Discount
The Vanguard FTSE Developed Markets ETF's trailing price-to-earnings ratio of 11.4 sits 35% below its five-year average of 17.6, indicating a significant historical discount that may attract value-oriented investors.
2. Forward Earnings Outlook
With a forward P/E ratio of 9.4—lower than the trailing multiple—analysts expect earnings growth across the ETF's 3,873 underlying positions, rather than a decline.
3. Top Holdings Impact
Samsung Electronics, at a 3.0% weighting, and SK Hynix, at 2.6%, are the largest individual holdings and will play a pivotal role in determining whether the projected earnings growth materializes.
4. Risk-Reward Tradeoff
The fund’s aggregate earnings yield of 8.8% provides a 4.4 percentage-point premium over the 10-year US Treasury yield, reflecting the additional return investors demand for assuming equity risk.
