VXUS
Vanguard Total International Stock ETF
VXUS tracks the FTSE Global All Cap ex US Index, providing comprehensive exposure to the entire international equity market outside the United States. With over 8,500 holdings across 45+ countries, it includes both developed and emerging markets across all market capitalizations. This ETF offers maximum international diversification in a single fund, capturing the full breadth of non-US equity markets. VXUS represents the complete international equity solution for investors seeking one-fund global diversification beyond US borders.
VEA
Vanguard FTSE Developed Markets ETF
VEA tracks the FTSE Developed All Cap ex US Index, focusing exclusively on developed markets outside the United States. With over 4,100 holdings across 25+ developed countries, it provides exposure to established economies with mature financial markets and regulatory frameworks. VEA excludes emerging markets entirely, reducing exposure to higher-risk countries while maintaining focus on developed nations like Japan, UK, Canada, Germany, and France. This ETF offers pure developed market exposure for investors seeking international diversification without emerging market volatility.
Key Metrics Comparison
| Metric | VXUS (Total International) | VEA (Developed Markets) | Winner |
|---|---|---|---|
| Expense Ratio | 0.07% | 0.05% | VEA (-0.02%) |
| Dividend Yield (TTM) | 3.1% | 3.0% | VXUS (+0.1%) |
| 5-Year Annual Return | 7.8% | 7.5% | VXUS (+0.3%) |
| Number of Holdings | 8,500+ | 4,100+ | VXUS (More diversified) |
| Countries Covered | 45+ (incl. EM) | 25+ (Developed only) | VXUS (Broader coverage) |
| Emerging Markets Exposure | 25% | 0% | VXUS (EM growth potential) |
| Assets Under Management | $65B | $125B | VEA (More established) |
| P/E Ratio | 14.5 | 15.2 | VXUS (Better valuation) |
| Price/Book Ratio | 1.8 | 1.9 | VXUS (Better valuation) |
| 5-Year Volatility | 17.2% | 16.0% | VEA (Less volatile) |
| Maximum Drawdown (2022) | -20% | -18% | VEA (Better protection) |
| Top 10 Concentration | 8.5% | 10.2% | VXUS (Better diversified) |
| Turnover Rate | 4% | 3% | VEA (Lower turnover) |
Performance Comparison
VXUS Performance Profile
Complete international exposure delivers higher returns with emerging markets growth. Strong performance during periods of emerging market outperformance and commodity booms. Higher volatility due to emerging market inclusion and currency diversification. Slightly higher dividend yield from emerging market dividend stocks. Historically performs well when emerging markets lead developed markets. More defensive during developed market-specific downturns. Captures the full growth potential of developing economies. Provides maximum diversification across all international equity markets.
VEA Performance Profile
Developed markets focus offers lower volatility and more stable returns. Slightly lower returns due to exclusion of higher-growth emerging markets. Lower volatility from established economies with mature financial systems. More predictable dividend yields from developed market blue-chips. Tends to outperform during developed market leadership and stability cycles. More resilient during global financial crises and emerging market turmoil. Pure developed market exposure without emerging market risk. Better for risk-averse investors seeking international diversification.
Strategy & Market Coverage Analysis
VXUS: Complete International Strategy
Total international market exposure:
- Tracks FTSE Global All Cap ex US Index (all non-US markets)
- 8,500+ holdings across 45+ countries
- Developed Markets: 75% (Europe, Japan, Canada, Australia)
- Emerging Markets: 25% (China, India, Brazil, Taiwan, Korea)
- All-cap coverage: Large, mid, small, and micro-cap stocks
- Maximum diversification across regions and economies
- Currency exposure: Dozens of currencies vs USD
- Complete one-fund international solution
- Emerging market growth potential included
- Captures full international equity opportunity set
VEA: Developed Markets Strategy
Pure developed markets focus:
- Tracks FTSE Developed All Cap ex US Index (developed only)
- 4,100+ holdings across 25+ developed countries
- Japan: 22% (largest single country weight)
- United Kingdom: 15% (second largest)
- Canada: 10% (resource-heavy economy)
- France: 8% (European economic powerhouse)
- Germany: 8% (manufacturing and exports)
- Switzerland: 7% (defensive, high-quality companies)
- Australia: 6% (resource and financial exposure)
- Zero emerging market exposure (risk reduction)
Market Coverage & Composition
Fundamental differences in market coverage and economic exposure:
VXUS Market Composition
VEA Market Composition
Investment Implications
VXUS Benefits: EM growth potential, maximum diversification, valuation discounts
VEA Benefits: Lower volatility, established markets, regulatory stability
VXUS Risks: EM volatility, currency risk, political risk
VEA Risks: Missed EM growth, developed market stagnation
Combined Approach: VEA for core (70%), VWO for EM (30%) = DIY VXUS
Economic Cycle: VXUS better in global growth, VEA better in risk-off periods
Holdings & Geographic Analysis
VXUS Top Holdings (Global)
Note: Includes both developed and emerging market leaders
VEA Top Holdings (Developed)
Note: Concentrated in developed market blue-chips
VXUS Geographic Distribution
VEA Geographic Distribution
Regional Comparison Insights
Emerging Markets Analysis
VXUS: 25% Emerging Markets Exposure
Growth Potential: EM economies grow faster than developed markets. Valuation Advantage: EM stocks trade at significant discounts. Currency Diversification: Multiple emerging market currencies.
VEA: 0% Emerging Markets Exposure
Risk Reduction: No EM volatility, currency crises, or political risk. Stability Focus: Established markets with mature regulations. Predictability: More consistent corporate governance and reporting.
EM Premium vs Risk Trade-off Analysis
EM Growth Premium: Emerging markets GDP growth 2x developed markets
EM Volatility Cost: EM stocks 30% more volatile than developed
Historical Performance: EM outperformed developed by 2% annually (2000-2010)
Recent Performance: Developed outperformed EM by 3% annually (2010-2020)
Valuation Discount: EM trade at 40% P/E discount to developed markets
Currency Impact: EM currencies add volatility but diversification benefits
On $100,000 over 10 years:
• If EM outperforms by 2% annually: VXUS gains ~$22,000 more than VEA
• If EM underperforms by 2% annually: VEA gains ~$22,000 more than VXUS
Strategic Consideration: VXUS offers optionality on EM recovery at low cost
Note: EM performance highly cyclical and dependent on commodity cycles.
Risk & Cost Analysis
VXUS Risk Profile
Key Risk Factors: Emerging market risk, currency risk, political risk, liquidity risk. Diversification Benefit: Maximum geographic and economic diversification.
VEA Risk Profile
Key Risk Factors: Developed market concentration, currency risk (developed), stagnation risk. Stability Advantage: Lower volatility from established markets.
Investor Use Cases & Scenarios
When VXUS Excels
Complete International: Want one-fund international solution
Maximum Diversification: Seek broadest possible global exposure
EM Growth Believers: Think emerging markets will outperform
Long-Term Horizon: Can tolerate EM volatility for growth
Valuation Investors: Attracted to EM valuation discounts
Simple Portfolio: Want minimal number of funds
Growth Priority: Willing to accept risk for higher returns
Global Economic Exposure: Want participation in all growth stories
When VEA Excels
Risk-Averse International: Want international with lower volatility
EM Skeptics: Prefer to avoid emerging market risks
Developed Focus: Want established markets only
Lower Cost Priority: Prefer 0.05% expense ratio
Stability Focus: Value predictable markets and regulations
Retirement Accounts: Lower volatility in tax-advantaged accounts
Combined with VWO: Want to control EM allocation separately
Political Risk Avoidance: Concerned about EM political instability
Investment Recommendation
🌍 Choose VXUS If:
- You want complete international exposure in one ETF
- You believe emerging markets will outperform developed
- Maximum diversification is important to you
- You have a long investment horizon (10+ years)
- You can tolerate higher volatility for potentially higher returns
- You want to capture global growth across all economies
- You prefer simplicity with minimal funds
- You're attracted to EM valuation discounts
🏢 Choose VEA If:
- You want international exposure without emerging markets
- Lower volatility is important to you
- You prefer established markets with mature regulations
- Ultra-low cost is your priority (0.05%)
- You're concerned about EM political or currency risks
- You want to control EM allocation separately with VWO
- You're more risk-averse in your international allocation
- You believe developed markets will continue leading
💡 Portfolio Construction Strategy
For simplicity & completeness: VXUS as single international holding. For risk control: VEA for developed markets only. For custom allocation: 70% VEA + 30% VWO = controlled EM exposure. For retirement accounts: Consider VEA for lower volatility in tax-advantaged accounts. For taxable accounts: Both are tax-efficient, VEA's lower turnover may provide slight advantage. For young investors: Higher allocation to VXUS for growth potential. For near-retirement: Higher allocation to VEA for stability. For market timing: Use VEA in risk-off periods, add VWO/VXUS when risk appetite returns. For valuation approach: Overweight VXUS when EM valuations are historically cheap.