Beyond the S&P 500: Which International ETF Is the Better Buy in 2026?
Key Points
iShares Core MSCI EAFE ETF offers a higher dividend yield but focuses primarily on developed international markets, not emerging markets.
Vanguard Total International Stock ETF has a slightly lower expense ratio and provides broader diversification with over 8,800 holdings.
Both funds delivered nearly identical five-year total returns regardless of their differing regional exposures and market concentrations.
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iShares Core MSCI EAFE ETF (NYSEMKT:IEFA) focuses on developed international markets with a higher yield, while Vanguard Total International Stock ETF (NASDAQ:VXUS) provides broader global exposure including emerging markets.
Both funds serve as core pillars for international equity exposure. While they share the goal of diversification outside the U.S., they differ significantly in geographical reach and market-cap inclusion, impacting their cost structures and long-term risk profiles for global investors.
Snapshot (cost & size)
| Metric | VXUS | IEFA |
|---|---|---|
| Issuer | Vanguard | iShares |
| Share price | $83.84 (as of 2026-10-15) | $96.62 (as of 2026-10-15) |
| Expense ratio | 0.05% | 0.07% |
| 1-yr return (as of 2026-10-15) | 16.3% | 14.2% |
| Dividend yield | 2.3% | 3.4% |
| Beta | 0.78 | 0.81 |
| AUM | $665.7B | $188.6B |
Beta measures price volatility relative to the S&P 500; beta is calculated from monthly returns over the available fund history (up to five years). The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.
The Vanguard fund remains one of the most affordable options in its category, though the iShares fund is very competitively priced. Income-focused investors may find the higher payout of the iShares fund more appealing.
Performance & risk comparison
| Metric | VXUS | IEFA |
|---|---|---|
| Max drawdown (5 yr) | (28.8%) | (30.0%) |
| Growth of $1,000 over 5 years (total return) | $1,499 | $1,497 |
What's inside
iShares Core MSCI EAFE ETF tracks international stocks in developed markets, excluding the U.S. and Canada. The portfolio holds 2,622 stocks across sectors like Financials 24%, Industrials 19%, and Information Technology 11%. Its largest positions include ASML Holding (ENXTAM:ASML) at 2.57%, HSBC Holdings (LSE:HSBA) at 1.29%, and Roche (XSWX:ROP) at 1.29%. The fund was launched in 2012. iShares Core MSCI EAFE ETF has paid $3.29 per share over the trailing 12 months, which on its recent ~$96.62 share price works out to a 3.41% yield.
Vanguard Total International Stock ETF offers broader exposure by including emerging markets and Canada, resulting in a portfolio of 8,849 holdings. Key sectors include Financial Services 23%, Technology 21%, and Industrials 14%. Top holdings include Taiwan Semiconductor Manufacturing (NYSE:TSM) at 4.27%, Samsung Electronics (KOSE:A005930) at 2.03%, and SK Hynix (NASDAQ:SKHY) at 1.67%. The fund was launched in 2011. Vanguard Total International Stock ETF has paid $1.98 per share over the trailing 12 months, which on its recent ~$83.84 share price works out to a 2.38% yield.
For more guidance on ETF investing, check out the full guide at this link.
Which looks like the better buy
Both funds have generated similar returns over the past several years, but a closer look at their geographic exposure gives Vanguard Total International Stock ETF an advantage.
Although Vanguard Total International Stock ETF offers a dividend yield roughly one percentage point lower than iShares Core MSCI EAFE ETF, it provides exposure to several key markets, including Taiwan, South Korea, Canada, and Brazil.
These countries stand to benefit from the ongoing global AI infrastructure buildout. Taiwan and South Korea are home to key semiconductor companies which are critical suppliers of advanced chips, memory, and computing hardware. Meanwhile, resource-rich countries like Canada and Brazil offer exposure to commodities such as copper, nickel, and aluminum, which are essential to expanding data centers, power infrastructure, and global electrification.
While Vanguard Total International Stock ETF emerging-market exposure introduces additional risks and potential volatility, it also provides access to growth opportunities unavailable through iShares Core MSCI EAFE ETF. For long-term investors willing to accept those risks in exchange for broader diversification and potential upside, Vanguard Total International Stock ETF.
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HSBC Holdings is an advertising partner of Motley Fool Money. RJ Fulton has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends ASML. The Motley Fool recommends Roche Holding AG and Roper Technologies. The Motley Fool has a disclosure policy.
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