VTI
Vanguard Total Stock Market ETF
VTI provides complete exposure to the entire US stock market, covering large-cap, mid-cap, small-cap, and micro-cap companies. It represents 100% of the investable US equity market, capturing the performance of the entire US economy. With ultra-low costs and comprehensive diversification, VTI is the foundation of many US-focused portfolios. The fund includes growth and value stocks across all sectors, offering pure domestic equity exposure without international holdings.
VXUS
Vanguard Total International Stock ETF
VXUS provides comprehensive exposure to international stock markets outside the United States, covering developed and emerging markets across Europe, Asia Pacific, and other regions. It represents nearly 100% of the investable international equity market, offering diversification beyond US borders. With broad diversification across countries, sectors, and market caps, VXUS captures global economic growth. The fund includes both developed markets (Europe, Japan, Canada) and emerging markets (China, India, Brazil).
Key Metrics Comparison
| Metric | VTI (US Total Market) | VXUS (International Total) | Winner |
|---|---|---|---|
| Expense Ratio | 0.03% | 0.07% | VTI (Lower cost) |
| Dividend Yield | 1.4% | 3.1% | VXUS (+1.7%) |
| 10-Year Annual Return | 11.8% | 4.2% | VTI (+7.6%) |
| Number of Holdings | 3,700+ | 8,500+ | VXUS (More diversified) |
| P/E Ratio | 22.5 | 14.2 | VXUS (Better valuation) |
| Price/Book Ratio | 3.8 | 1.6 | VXUS (Better valuation) |
| 10-Year Volatility | 15.8% | 16.5% | VTI (Lower volatility) |
| Maximum Drawdown (2022) | -25% | -23% | VXUS (Better protection) |
| Developed Markets % | 100% US | 75% | VTI (All developed) |
| Emerging Markets % | 0% | 25% | VXUS (Growth exposure) |
Performance Comparison
VTI Performance Profile
Strong long-term performance driven by US market leadership. 10-year returns of 11.8% reflect US economic strength and innovation. Lower dividend yield with focus on growth and capital appreciation. Benefits from US corporate profitability, technology leadership, and favorable regulatory environment. Historically strong performance but with periods of high valuation concerns. Captures US market cycles and economic expansions. Lower volatility than international markets in recent decades. Driven by mega-cap technology and innovation.
VXUS Performance Profile
Lower long-term returns but with significant diversification benefits. 10-year returns of 4.2% reflect international market underperformance. Higher dividend yield from mature international companies and emerging markets. Benefits from global economic growth, currency diversification, and different market cycles. Historically lower returns than US but with periods of outperformance. Higher volatility due to currency fluctuations and emerging markets. Captures growth in developing economies and value in developed markets. Currently trading at significant valuation discounts to US.
Strategy Analysis
VTI: US Total Market Strategy
Complete US equity exposure:
- Tracks CRSP US Total Market Index
- 3,700+ US stocks across all market caps
- 100% US domestic exposure
- Covers large, mid, small, and micro-cap
- Market capitalization weighted
- Ultra-low expense ratio (0.03%)
- Focus on US economic growth
- Technology and innovation heavy
- Quarterly dividend distributions
VXUS: International Total Market Strategy
Complete international equity exposure:
- Tracks FTSE Global All Cap ex US Index
- 8,500+ international stocks
- 75% developed markets, 25% emerging
- Covers Europe, Asia Pacific, Canada, emerging
- Market capitalization weighted
- Very low expense ratio (0.07%)
- Focus on global diversification
- Currency exposure benefits/risks
- Quarterly dividend distributions
Geographical & Market Analysis
VTI provides concentrated US exposure while VXUS offers broad global diversification across developed and emerging markets.
VTI Geographic Breakdown
United States: 100%
Large-Cap: 70% (Apple, Microsoft, etc.)
Mid-Cap: 20%
Small-Cap: 10%
Technology Sector: 28% (largest)
Financials: 13% (second largest)
Healthcare: 12%
Consumer Discretionary: 11%
VXUS Geographic Breakdown
Developed Markets: 75%
Emerging Markets: 25%
Japan: 16% (largest country)
United Kingdom: 9%
China: 8% (including Hong Kong)
Canada: 7%
France: 6%
Switzerland: 5%
Germany: 5%
Australia: 4%
Taiwan: 4%
South Korea: 3%
India: 3%
Other Countries: 21%
Market Characteristics
VTI Valuations: Higher P/E (22.5), P/B (3.8)
VXUS Valuations: Lower P/E (14.2), P/B (1.6)
Growth Expectations: VTI higher, VXUS moderate
Dividend Focus: VXUS higher yield (3.1%)
Currency Risk: VXUS has forex exposure
Political Risk: VXUS more diverse
Economic Cycles: Different timing globally
Regulatory Environment: VTI more consistent
Diversification Analysis
VTI Diversification Profile
Complete diversification within US equity markets. Covers all market caps from mega-cap to micro-cap. Broad sector exposure but technology-heavy (28%). No international diversification - concentrated US risk. Currency exposure only to US dollar. Political and regulatory exposure to US only. Economic exposure to US business cycles. Strong diversification within US but no global risk reduction. Benefits from US innovation and corporate profitability.
VXUS Diversification Profile
Extensive global diversification across 8,500+ companies. Broad country exposure (Europe, Asia, emerging markets). Mix of developed (75%) and emerging markets (25%). Currency diversification with exposure to multiple currencies. Political and regulatory diversification across countries. Economic diversification across different growth cycles. Sector diversification with different sector weights than US. Reduces single-country risk but adds currency and political risks.
Portfolio Characteristics
VTI Top Holdings (US Total Market)
Note: 3,700+ US stocks, tech-heavy, large-cap dominated, complete US coverage
VXUS Top Holdings (International Total)
Note: 8,500+ international stocks, 40+ countries, developed/emerging mix, currency diversified
Risk & Currency Analysis
VTI Risk Profile
Country Risk: Concentrated US exposure
Currency Risk: US dollar only
Valuation Risk: Higher P/E, P/B ratios
Sector Risk: Technology concentration (28%)
Political Risk: US political environment only
Regulatory Risk: US regulations only
Economic Risk: US business cycles
Innovation Risk: Tech disruption exposure
Interest Rate Risk: Sensitive to US Fed policy
VXUS Risk Profile
Country Risk: Diversified across 40+ countries
Currency Risk: Multiple currency exposure
Valuation Risk: Lower but emerging market risks
Political Risk: Diverse political systems
Regulatory Risk: Multiple regulatory regimes
Economic Risk: Global economic cycles
Emerging Market Risk: 25% in developing economies
Geopolitical Risk: International tensions
Currency Volatility: Forex fluctuations impact returns
Investor Use Cases & Scenarios
When VTI Excels
US-Focused Investors: Believe in US economic leadership
Cost Minimizers: Ultra-low expense ratio (0.03%)
Growth Investors: Want US innovation exposure
Home Bias: Prefer investing in home country
Tax Efficiency: US tax treatment familiarity
Currency Stability: Want US dollar exposure only
Regulatory Comfort: Familiar with US regulations
Performance Chasers: Recent US outperformance
When VXUS Excels
Global Diversifiers: Want international exposure
Value Investors: Lower valuations (P/E 14.2)
Dividend Seekers: Higher yield (3.1%)
Risk Reducers: Country diversification
Currency Hedgers: Want non-dollar exposure
Contrarian Investors: Betting on international rebound
Emerging Market Growth: Want developing economy exposure
Portfolio Balancers: Reduce US concentration
Investment Recommendation
🇺🇸 Choose VTI If:
- You believe US markets will continue outperforming
- You want the lowest possible costs (0.03% expense)
- You prefer familiar US companies and regulations
- You want exposure to US innovation and technology
- You're comfortable with higher valuations
- You want pure US dollar exposure
- You prioritize recent strong performance trends
- You want simplicity in a single-country fund
🌍 Choose VXUS If:
- You want global diversification beyond the US
- You're attracted to lower valuations (P/E 14.2)
- You want higher dividend income (3.1% yield)
- You believe international markets will rebound
- You want emerging market growth exposure
- You're concerned about US concentration risk
- You want currency diversification benefits
- You're building a globally balanced portfolio
💡 Portfolio Construction Strategy
For most investors: A combination of both provides optimal diversification. For US-focused investors: 80-100% VTI, 0-20% VXUS. For global market weight: ~60% VTI, ~40% VXUS (reflects global market caps). For aggressive growth: 100% VTI for US innovation focus. For value/dividend focus: Higher VXUS allocation for yield and valuations. For risk reduction: Significant VXUS allocation reduces US concentration. For tax efficiency: VTI in taxable (qualified dividends), VXUS in tax-advantaged (foreign tax credit). For performance chasers: Recent trends favor VTI but may reverse. For long-term investors: Global diversification (VXUS) reduces sequence risk. For combined approach: VT (Vanguard Total World) provides automatic global balance.