The Vanguard Total World Stock ETF (VT) is Great, But Check Out These Global Equity Factor ETFs Too

There’s a reason the Vanguard Total World Stock ETF (VT) remains so popular. It’s the go-to global equity ETF for Bogleheads, the group of investors who follow Jack Bogle’s principles of keeping costs low, avoiding market timing, and holding broad index funds through thick and thin. I’ve disagreed with them on plenty over the years, but I’ll give credit where it’s due—VT is a fantastic ETF.

For just 0.06% in fees, recently reduced from 0.07% thanks to Vanguard, you get exposure to more than 9,700 market cap–weighted stocks across the U.S., developed international, and emerging markets. Turnover is low at 2.8% annually, and the fund's design allows you to basically buy the whole world and forget it.

That said, VT is very much a baseline approach. Being average isn’t bad, but if you believe in factor investing, there are smarter ways to tilt your global exposure. You’ll have to accept the possibility of short-term underperformance and pay a bit more in fees, but the long-term potential is there.

Here’s a look at two global equity ETFs I personally like as VT replacements, one from Dimensional Fund Advisors and the other from iShares.

Dimensional World Equity ETF (DFAW)

A few decades ago, economists Eugene Fama and Kenneth French looked at the Capital Asset Pricing Model (CAPM) and found it lacking.

CAPM used market risk as the sole variable to explain stock returns, but they argued that wasn’t enough. Too much of the variation in equity performance remained unexplained. To address CAPM’s limitations, they introduced a three-factor model, which later evolved into a five-factor model.

The added variables—or factors—were size (small-cap stocks tend to outperform large-caps), value (cheap stocks tend to outperform expensive ones), profitability (more profitable companies outperform less profitable ones), and investment (companies that reinvest conservatively tend to outperform those with aggressive reinvestment).

These ideas laid the foundation for the factor investing approach. Both Fama and French have deep ties to Dimensional Fund Advisors, a firm that helped pioneer the application of factor research through mutual funds and, more recently, ETFs. One such product, the Dimensional World Equity ETF (DFAW), is one of my preferred VT alternatives.

DFAW is actively managed, but not in the way most people think. There’s no discretionary stock picking or market timing. Instead, the fund relies on a rules-based, quantitative strategy that targets specific factor exposures while maintaining low turnover—just 7% annually. The ETF is structured as a fund of funds, holding five other Dimensional ETFs to build diversified global exposure.

Currently, its portfolio consists of 53.31% in U.S. core equity, 18.94% in international developed core equity, 17.82% in additional U.S. core equity exposure, 7.90% in emerging markets core equity, and 2.04% in global real estate. That gives it a total equity allocation of 97.96%, with the remaining exposure in real estate.

In practical terms, DFAW is basically VT with some smart tilts. You still get global diversification, but with a bit more exposure to smaller companies, undervalued stocks, and more profitable firms. The expense ratio comes in at 0.25%, which is higher than VT, but still very affordable given the added complexity and active factor management.

iShares MSCI Global Min Vol Factor ETF (ACWV)

The Fama-French five-factor model isn’t the only factor-based framework in town. Index provider MSCI, best known for its global benchmarks like the MSCI World and MSCI Emerging Markets indexes, has developed its own multi-factor model.

While it overlaps with Fama-French on key variables like size, value, and quality, MSCI also includes additional factors—one of the most notable being the minimum volatility factor.

Minimum volatility, or min vol, is often confused with low volatility, but it’s not the same thing. Low-volatility strategies tend to screen for stocks with the lowest individual standard deviation or beta.

Min vol, on the other hand, takes a portfolio-level view. It looks at how stocks interact with one another and constructs the most efficient combination to reduce overall portfolio variance.

To put this into action, MSCI partnered with iShares to launch the iShares MSCI Global Min Vol Factor ETF (ACWV) in 2011. It’s gained a decent following, with $3.3 billion in assets under management.

The fund tracks the MSCI All Country World Minimum Volatility Index, which uses a quantitative optimization framework to reduce expected volatility while maintaining broad exposure to global equities.

A key strength of ACWV is that it’s more or less sector neutral. Unlike traditional low-volatility strategies that often lean heavily on defensive sectors like utilities and consumer staples, ACWV mirrors the sector weights of the broader market more closely.

Like the broader MSCI ACWI Index, ACWV still holds overweight positions in sectors like information technology, financials, healthcare, and communications, but avoids the extreme skews that can show up in single-factor strategies.

So far, it has delivered on its promise. From October 20, 2011, through April 17, 2025, ACWV outperformed VT on a risk-adjusted basis, posting a Sharpe ratio of 0.61 compared to 0.55 for VT. It’s done so by consistently reducing both maximum drawdown and annualized volatility.

The ETF is also reasonably priced with a 0.20% expense ratio. And it doesn’t have to be an all-or-nothing choice. ACWV and VT are highly complementary. ACWV currently holds 391 stocks, with 361 overlapping with VT. That’s a 97.8% overlap by count, meaning you can simply add ACWV to a VT portfolio in whatever weight makes sense for your risk tolerance.