Is VXUS the Smartest Way to Own the Entire World Outside the U.S.?

International stocks have been hot over the past 16 months, significantly outperforming U.S. stocks since the beginning of 2025. That outperformance continued into 2026, as most international indexes are up, while U.S. markets have mostly sputtered through the first four months of the year.

Diversifying your portfolio with international stocks and exchange-traded funds (ETFs) is more important now than it has been in recent years, when U.S. stocks were surging. With market uncertainty and the potential for muted long-term returns in the U.S., particularly among large caps and tech stocks, investors may find some alpha overseas.

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However, one challenge for U.S. investors is knowing where to find good international stocks. It is hard enough to identify winners in a volatile domestic market, but with less access to information about stocks in foreign markets, it is often even more difficult.

But there is one pretty straightforward way to tap into international stocks, and I mean all of them. That would be through an investment in the Vanguard Total International Stock ETF (NASDAQ: VXUS).

Owning the world

As the name suggests, the Vanguard Total International Stock ETF invests across the entire gamut of international stocks, including developed and emerging markets.

Specifically, it tracks the FTSE Global All Cap ex US Index, which provides broad exposure to some 8,794 stocks across international and emerging markets of all cap sizes.

It is the international equivalent of the Vanguard Total Stock Market ETF (NYSEMKT: VTI), which tracks the broad universe of U.S. stocks.

The Vanguard Total International Stock ETF is cap-weighted, so the largest stocks take up a bigger portion of the portfolio. Currently, the largest holding is Taiwan Semiconductor Manufacturing at 3.45%. Samsung Electronics is second at 1.35%, followed by semiconductor stock ASML at 1.27%. The other 8,700-plus stocks each represent less than 1% of the portfolio.

It is that diversification that makes this Vanguard ETF attractive to investors seeking exposure to international stocks with lower risk.

The Vanguard Total International Stock ETF has been a steady performer this year, up around 9% year to date. That beats the S&P 500, which is up roughly 3% year to date.

Over the longer term, including the past five- and 10-year periods, it trails the S&P 500, but that is not surprising, given the strong run for U.S. stocks. But many strategists, including those at Vanguard, see international stocks outperforming U.S. stocks over the next decade.

This type of broad market international ETF would serve as a good core holding in a portfolio, alongside a broad U.S. market ETF and perhaps a mix of growth- and value-oriented investments.

Dave Kovaleski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends ASML and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.