Vanguard VEA vs iShares IXUS: Which International ETF Promises Better Performance in 2026?

The Vanguard FTSE Developed Markets ETF (NYSEMKT:VEA) offers a significant cost advantage and larger scale, while iShares Core MSCI Total International Stock ETF (NASDAQ:IXUS) provides broader geographic diversification by including emerging markets.

Both Vanguard FTSE Developed Markets ETF and iShares Core MSCI Total International Stock ETF offer broad international equity exposure. While they share similar goals, the Vanguard fund focuses strictly on developed markets, whereas the iShares fund includes emerging market economies such as Taiwan and South Korea in its mandate.

Snapshot (cost & size)

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 as of the close of trading on Aug. 13.

The Vanguard fund is more affordable with an expense ratio of 0.03%, compared to 0.07% for the iShares fund. Investors may also consider the higher payout from the iShares fund, which reflects a 0.38 percentage point yield gap.

Performance & risk comparison

What's inside

Vanguard FTSE Developed Markets ETF focuses on non-U.S. developed markets with a portfolio tilted toward financial services at 25%, industrials at 18%, and technology at 15%. Its largest positions include Samsung Electronics at 2.5%, ASML Holding (NASDAQ:ASML) at 2%, and SK Hynix (NASDAQ:SKHY) at 1.9%. It holds 3,875 stocks and was launched in 2007. Vanguard FTSE Developed Markets ETF has paid $1.81 per share over the trailing 12 months, which on its recent ~$73.5 share price works out to a 2.5% yield.

iShares Core MSCI Total International Stock ETF tracks a broader index of large, mid, and small-cap companies outside the U.S. -- including emerging markets. Its sector allocation is led by financial services at 24%, technology at 20%, and industrials at 15%. Its largest positions include Taiwan Semiconductor Manufacturing at 4.3%, Samsung Electronics at 2%, and SK Hynix at 1.6%. It contains 4,476 holdings and was launched in 2012. iShares Core MSCI Total International Stock ETF has paid $2.80 per share over the trailing 12 months, which on its recent ~$98.0 share price works out to a 2.9% yield.

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Which looks like the better buy?

These funds are similar in several ways. Both offer international, non-U.S. exposure, which is valuable, considering most U.S. investors are probably overweighted in American listings through their various investments. Both the Vanguard fund, VEA, and the iShares offering, IXUS, offer a widely diverse basket of securities across similar styles-- both are 79% invested in large caps (mostly a blend of value and growth stocks), 17% in mid caps, and 4% in small caps. They also shares seven of the same stocks among their top 10 holdings, and those top 10 stocks account for roughly 13% of assets in each of the funds.

But there are crucial differences investors may want to be aware of. For one, IXUS invests more broadly to include emerging markets, nearly 16% of holdings, compared to less than 1% for the Vanguard fund. Theoretically, emerging markets should grow faster than developed markets, although that hasn't been the case in reality.

Ultimately, the way to decide between these two is to look at performance. Here, VEA bests IXUS across multiple time frames, although not by much--less than two percentage points in some time frames. VEA returned an annualized 17.8%, 9.9%, and 10% over the 3-year, 5-year, and 10-year look-backs. IXUS by comparison, returned 17%, 8.8%, and 9.4% in the 3-, 5-, and 10-year periods. That may not seem like much, but over 10 years the Vanguard fund would have returned about an extra $1,500 on a $10,000 initial investment than IXUS.

Since you're investing to make money, go with the fund that has consistently provided better returns. That's VEA, the Vanguard FTSE Developed Markets ETF.

Brendan Coffey has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Vanguard FTSE Developed Markets ETF. The Motley Fool has a disclosure policy.