The financial independence community is currently processing a significant strategic pivot from one of its most influential figures, JL Collins. Known globally as the author of The Simple Path to Wealth and a staunch advocate for a U.S.-centric investment approach, Collins has announced a transition in his personal portfolio that includes a move toward international equities and a shift from traditional mutual funds to Exchange-Traded Funds (ETFs). This decision marks a notable evolution in a philosophy that has guided hundreds of thousands of retail investors toward a "VTSAX and chill" mentality—the practice of investing solely in Vanguard’s Total Stock Market Index Fund.
The Evolution of the Simple Path Strategy
For over a decade, the "Simple Path" has been synonymous with the belief that the United States represents the most robust, innovative, and reliable economy in the world. Collins’ primary recommendation for U.S.-based investors has long been the Vanguard Total Stock Market Index Fund (VTSAX) or its ETF equivalent (VTI). His rationale was rooted in the idea that large U.S. corporations are essentially international entities, deriving a significant portion of their revenue from overseas markets, thus providing U.S. investors with "built-in" international exposure without the added complexity or cost of international-specific funds.
However, recent adjustments to the Collins family portfolios suggest a reassessment of this long-standing thesis. In a recent disclosure, Collins revealed that he has begun moving assets into Vanguard’s Total World Stock Index ETF (VT). This fund tracks the FTSE Global All Cap Index, providing exposure to both U.S. and non-U.S. equities. While the U.S. still maintains a dominant 62.5% weight within VT, the inclusion of 37.5% in international markets represents a fundamental shift for an investor who previously viewed international funds as unnecessary for domestic earners.
Chronology of a Shifting Perspective
The timeline of this transition can be traced back to 2012, when Collins first outlined his stance on international funds. At that time, he argued that while international diversification was a valid choice for those outside the United States, American investors could "get away with" a domestic-only approach due to the sheer scale of the U.S. economy.
The catalyst for the current change appears to be a confluence of geopolitical shifts and market performance data from 2024 and 2025. During a recent interview with a Polish financial podcaster, Collins reiterated his advice for international investors to utilize world funds like VT or VTWAX. However, he noted that the timeline for U.S. investors to follow suit has accelerated. The shift was formally implemented within the Collins family IRAs to avoid the tax implications of capital gains, signaling a tactical move to modernize the portfolio’s geographical footprint.
Comparative Economic Data and Market Performance
The rationale for this pivot is supported by a series of macroeconomic indicators that suggest the U.S. share of the global economy is in a long-term state of contraction, albeit while the total global "pie" continues to grow.
1. Global GDP Share Erosion
At the conclusion of World War II in 1945, the United States was the world’s undisputed industrial powerhouse, accounting for approximately 50% of global GDP. By 1960, as Europe and Japan rebuilt via the Marshall Plan, the U.S. share dipped to roughly 40%. Today, that figure sits at approximately 25%. While the U.S. economy has grown in absolute terms—from $2.5 trillion in 1945 to over $32 trillion today—its relative dominance has faded as China ($21 trillion) and the European Union have expanded their economic footprints.
2. Equity Market Capitalization
In the mid-20th century, the U.S. accounted for nearly 80% of global equity market capitalization. This has steadily declined to approximately 46% in the current market. Collins notes that his previous threshold for reconsidering a world fund was when the U.S. share dropped below 40%. However, recent events have prompted action before that threshold was reached.
3. The 2025 Performance Gap
Market data from 2025 served as a stark wake-up call for U.S.-only investors. While the S&P 500 posted a respectable 16.4% return—higher than the 50-year average of 12%—it lagged significantly behind the rest of the world. In a list of the top 30 performing countries, the U.S. ranked near the bottom.
- Mexico: ~55% return
- European Union: Most countries exceeded 30%
- China: ~30% return
- Canada: ~30% return
- India: ~11% (the only major market to perform worse than the U.S. among top peers)
This "embarrassing" relative performance, as Collins described it, suggests that the U.S. may no longer be the sole engine of global wealth creation.
Macroeconomic Pressures and Geopolitical Concerns
The decision to diversify internationally is not merely a reaction to short-term price action but a response to structural changes in the global order. Several factors were cited as contributing to a more cautious outlook on the U.S. domestic market:
- Trade Policy and Tariffs: The implementation of aggressive and often erratic tariffs has raised concerns about the reliability of the U.S. as a trading partner. Analysts suggest that such policies may encourage other nations to form stronger regional trade bonds that bypass the U.S., potentially diminishing American influence on the global stage.
- Inflationary Risks: As companies reach the limit of their ability to absorb tariff costs, these expenses are likely to be passed on to consumers, creating persistent inflationary pressure that could hamper domestic growth.
- The U.S. Dollar as Reserve Currency: While the U.S. Dollar remains the world’s primary reserve currency, its position is facing unprecedented scrutiny. In the past year, the dollar saw a 10% decline against a basket of other currencies, the sharpest drop in five decades. Nations are increasingly exploring trade settlements in alternative currencies to reduce dependence on the U.S. financial system.
- National Debt: The U.S. national debt is currently approaching the $40 trillion mark. The fiscal burden of servicing this debt, especially in a higher-interest-rate environment, presents a long-term headwind for domestic economic expansion.
The Transition from Mutual Funds to ETFs
Parallel to the geographical shift is a technical change in how the Collins portfolio is structured. For years, VTSAX (the mutual fund) was the preferred vehicle due to its simplicity and the historical ease of automated investing through Vanguard. However, the rise of ETFs has changed the cost-benefit analysis.
Collins cited lower Expense Ratios (ER) as a primary driver for the switch. For example, the World Fund mutual fund (VTWAX) carries an ER of 0.09%, whereas its ETF counterpart (VT) is priced at 0.06%. Similarly, VTSAX carries an ER of 0.04%, while the ETF version (VTI) sits at 0.03%.
While these differences—one to three basis points—are negligible for smaller accounts, they represent a commitment to the "cheaper is better" mantra of index investing. Furthermore, the modern brokerage landscape has eliminated the trading commissions that once made ETFs less attractive than mutual funds for those making frequent, small contributions.
Broader Implications for the Investing Public
The shift by a figure as prominent as JL Collins is likely to spark a broader debate within the retail investing community regarding "Home Country Bias." Many U.S. investors have traditionally avoided international stocks due to their higher volatility and a decade of underperformance relative to the S&P 500.
However, financial historians often point to the 1970s and the 2000s—the "lost decade"—as periods where international stocks significantly outperformed U.S. stocks. If the 2025 data is a precursor to a new cycle of international dominance, those holding only domestic assets may face lower risk-adjusted returns.
The move to VT (Total World) offers an automated solution to this problem. Because VT is market-cap weighted, it automatically adjusts the ratio of U.S. to international stocks based on the total value of the global markets. If the U.S. economy continues to shrink as a percentage of the global whole, the fund will naturally rebalance toward emerging and other developed markets without requiring the investor to make a conscious "market call."
Conclusion: A New Mantra for a Changing World
Despite these changes, the core tenets of the "Simple Path" remain intact: low-cost, broad-based indexing and a long-term holding period. The adjustment is not a retreat from equities or a bet against America, but rather a recognition that the "Simple Path" must adapt to a multi-polar global economy.
For the community of investors who have followed Collins’ advice for years, the message has shifted from "VTSAX and Chill" to a more flexible "VTI or VT and Chill." The underlying principle remains the same: buy the world, ignore the noise, and stay the course. However, for the first time in the history of this movement, "the world" now explicitly includes the markets beyond the borders of the United States.
