Vanguard VXUS vs. iShares IXUS: Which ETF Wins This International Showdown?

Vanguard Total International Stock ETF (NASDAQ:VXUS) and iShares Core MSCI Total International Stock ETF (NASDAQ:IXUS) offer nearly identical international market exposure with subtle differences in yield, expense ratios, and portfolio depth.

These funds serve as core holdings for investors seeking to balance a U.S.-heavy portfolio with broad international exposure, including significant stakes in Europe, the Pacific, and emerging markets. While the iShares fund covers large-, mid-, and small-cap companies, the Vanguard ETF tracks the FTSE Global All Cap ex US Index, providing one of the most comprehensive international stock samplings available to retail investors.

Snapshot (cost & size)

Beta measures price volatility relative to the S&P 500; beta is calculated from five-year monthly returns. The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.

Vanguard is the price leader here with a 0.05% expense ratio, though iShares remains highly competitive at 0.07%. I personally would not quibble over a 2-basis-point difference. IXUS currently offers a slightly higher trailing-12-month dividend yield.

Performance & risk comparison

What's inside

The iShares ETF replicates an index consisting of large-, mid-, and small-cap companies based outside the United States. It currently holds 4,337 stocks, with a portfolio heavily weighted toward technology at 24%, financial services at 23%, and industrials at 14%. Its largest positions include Taiwan Semiconductor Manufacturing (TWSE:2330) at 4.45%, Samsung Electronics (KOSE:A005930) at 2.01%, and SK hynix (KOSE:A000660) at 1.82%. The fund was launched in 2012. It has paid $2.80 per share over the trailing 12 months.

The Vanguard fund mirrors the FTSE Global All Cap ex US Index, providing even broader exposure with 8,738 holdings. This ETF includes a larger concentration of microcap stocks than its iShares peer. Its sector allocation currently favors financial services at 22%, technology at 21%, and industrials at 16%. Top holdings include Taiwan Semiconductor Manufacturing at 3.99%, Samsung Electronics at 2.19%, and SK hynix at 1.87%. The fund was launched in 2011. It has paid $2.19 per share over the trailing 12 months.

For more guidance on ETF investing, check out the full guide at this link.

What this means for investors

There is hardly any daylight between VXUS and IXUS. They have pretty comparable one- and five-year returns, as well as basically the same maximum drawdown. Vanguard's fund is marginally cheaper. (Personally, I would not factor in a 2-basis-point difference when making an investing decision here.) Dividend yields are pretty close. They even have the same top three holdings! And they're both diversified, holding huge baskets of stocks; 4,000 equities or so versus 8,000 is actually not that meaningful. It's not the lack of diversification that's evident, for example, in 30 stocks versus 60, even if the ratio is the same.

So what does set these two apart? Mainly, assets under management. VXUS is more than 10 times the size of IXUS, and accordingly, has much higher average trading volume. That increased liquidity may tip the scales in VXUS' favor for some investors.

Erin Kennedy has positions in Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.