The S&P 500's above-average performance in the past decade has been boosted by the rising dominance of powerful technology companies. The smartest investors are wondering if the U.S. stock market is about to enter a period of subpar performance.
Vanguard Total International Stock ETF earns a Buy rating, with a recommended 10-20% allocation in diversified portfolios. VXUS trades at a significant valuation discount to US equities, with a trailing P/E of 16.9x versus the S&P 500's 29x. Structural catalysts in Europe, Japan, and emerging Asia, combined with accelerating earnings growth, support a durable multi-year international equity rally.
Recent Vanguard research forecasts higher growth for international stocks than for U.S. stocks -- for the next 10 years. The Vanguard Total International Stock ETF has outperformed the S&P 500 index and Nasdaq-100 index for the past year.
If you own U.S. stocks, you've likely questioned whether international diversification still makes sense.
The Vanguard Total International Stock Index Fund outperformed in 2025, driven by a weak dollar, sector rotation, and attractive relative valuations. The recent outperformance is likely unsustainable as the dollar stabilizes, technology consolidates, and the valuation gap narrows. I rate VXUS as a hold, given fading drivers and its history of long-term structural underperformance versus U.S. equities.
VXUS charges a much lower expense ratio and covers far more international stocks than ACWX ACWX has delivered a slightly higher one-year return but comes with a lower dividend yield Sector allocations differ, with ACWX tilted toward financials and technology while VXUS is heavily weighted in cash and others We're bullish on these 10 stocks ›
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.