The Vanguard Total International Stock Index Fund offers broad, low-cost international equity exposure with a mere 0.05% annual fee. The fund provides strongly diversified exposure across both sector and geography. Recent outperformance of international markets and a weaker U.S. dollar make this a good time to consider international ETFs.
Tilting towards Global-Ex US stocks offers diversification benefits and reduces home country bias in portfolios. Vanguard Total International Stock Index Fund ETF provides broad exposure to international equities, capturing growth opportunities outside the US. Current market conditions make international stocks attractive relative to US valuations.
VXUS provides broad, low-cost exposure to international stocks, including emerging markets, making it a top choice for global diversification. Despite recent underperformance versus US stocks, international equities offer cyclical return potential and reduce sequence risk, especially in retirement. Recent US stocks' outperformance is driven by valuation expansion and growth, but history shows leadership rotates between US and international markets.
The Vanguard Total International Stock Index Fund ETF Shares receives a sell rating due to its lack of high-quality holdings and significant exposure to underperforming companies. Political uncertainty, a slowing economy, and cautious Fed policies make targeted financial strategies more effective than investing in benchmarks. VXUS has underperformed the S&P 500 and peers due to its narrow focus on non-US companies and limited exposure to top-performing American sectors.
Amid rising market volatility and increasing uncertainty over U.S. tariff policies, investors are turning their attention to international dividend-focused ETFs.
It's been a rough start to 2025 for U.S. stocks. All three major U.S. indexes are down, with the tech-focused Nasdaq Composite (^IXIC -4.00%) faring the worst, 13.4% off its highs from December.
In general, I believe accounts should hold no more than 8 ETFs, with exceptions for fixed maturity bond and single-country equity ETFs. Splitting the broad international exposure of VXUS into single-country ETFs offers advantages like tax loss harvesting, more optimal asset location, and excluding exposures better owned elsewhere. Here I present a portfolio of 13 Franklin single-country ETFs with a weighted average expense ratio of
Global stock markets have gotten off to a healthy start in 2025. Late last year, Goldman Sachs, along with several other major investment firms, forecast around a 10% total return for the benchmark S&P 500 this year.
I am upgrading the Vanguard Total International Stock Index Fund ETF Shares from a hold to a buy due to its compelling valuation and diversified portfolio. VXUS trades at a significant discount to the S&P 500 with a P/E ratio of about 13 and a dividend yield difference of 1.7 percentage points. The ETF offers broad exposure to developed and emerging markets, with a diversified sector mix and a low expense ratio of 8 basis points.
US stocks have outperformed international stocks significantly, but now is a crucial time to consider increasing allocation to international stocks due to valuation differences. Vanguard Total International Stock Index Fund ETF Shares' forward P/E ratio is much lower than VTI's, suggesting US valuations may be overextended, offering better odds for good returns with VXUS, even without assuming growth. VXUS covers 51 foreign markets, and is significantly more diversified, with the top 5 holdings only making up 6%, vs 22.5% for VTI.
The Vanguard Total International Stock Market ETF offers broad exposure to international markets. However, the VXUS ETF's performance has been awful over the last decade. History shows there's not much sense in diversifying outside the US.
The Vanguard Total International Stock Index Fund ETF tracks ex-US equities with a focus on Europe (40.4% of assets), the Pacific (26.3%), and Emerging Markets (25.7%). The VXUS has underperformed the SPY so far in 2024, delivering a ~13% total return. This has resulted in VXUS trading at a ~2% higher earnings yield. GDP growth in Japan, the United Kingdom, and Canada is forecast to accelerate going into 2025, while GDP growth in emerging markets should stabilize at a high rate.