Vanguard Total International Stock Index Fund Investor Shares (VXUS)
VXUS: Compelling Equity Risk Premium, Low PEG Make It A Buy (Rating Upgrade)
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.
VXUS: 51 Countries Against 1
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.
VXUS: You May Not Need International Exposure At All
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.
VXUS: Add International Exposure At A Discount To The S&P 500
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.
VXUS: There Are Good Reasons Why It Continues To Underperform The S&P 500
Orthodox investment practice allocates a third or more of total assets to Ex-US Funds. Compared to U.S.-only investment, this has led to dramatic underperformance lasting over a decade. We examine the reasons why The Vanguard Total International Stock Market ETF has done so poorly by looking closely at its holdings. We also list several persistent qualitative factors that suggest broad market international ETFs will not see their performance improve over the long term.
VXUS: Why I'm Buying This International Stock ETF With A 3% Yield
Vanguard Total International Stock Index Fund ETF focuses on global companies with dividends. Reducing exposure to U.S. stocks and increasing exposure to global stocks could make sense right now. Top holdings include Taiwan Semiconductor, Novo Nordisk, and ASML Holding NV, each representing less than 2% of the portfolio.
