You are currently viewing VEA vs VXUS: Which Is The Best International ETF?

VEA vs VXUS: Which Is The Best International ETF?

  • Reading time:9 mins read

We compare VEA vs VXUS:

Both the Vanguard FTSE Developed Markets Index Fund ETF Shares (VEA), and the Vanguard Total International Stock Index Fund ETF Shares (VXUS) are Vanguard Foreign Large Blend funds.

In addition, both ETFs have shown positive performance in the last 5 years.

Therefore, both VEA and VXIS may be recommended options for investors.

However, the most striking difference between VEA and VXUS is based on the underlying index; they track different indexes.

VEA also has a lower exposure to some major sectors like financial services.

This article will compare VEA vs VXUS extract the edges each fund has over the other.  This will enable you to choose based on which ETF best suits your investment needs.

VEA vs VXUS Graphic

 

VEA vs VXUS Comparison

The main difference between VEA and VXUS is the index they track.  VEA tracks the FTSE Developed All Cap ex US Index, and VXUS tracks the FTSE Global All Cap ex-US Index.

Both VEA and VXUS are Vanguard ETFs and are FTSE-based; however, their underlying indexes differ.

VEA tracks FTSE Developed All Cap ex-US Index

VXUS tracks FTSE Global All Cap ex-US Index

VEA vs VXUS Comparison Chart

VEA focuses on developed markets outside the US and small-cap, mid-cap, and large-cap individual companies; the fund is market-capitalization-weighted.

The fund comprises nearly 3,700 ordinary stocks of companies located in the major markets of Europe, Asia-Pacific, and Canada.

VXUS focuses on both developed and emerging markets, excluding the United States.

The FTSE Global All Cap ex US Index is a free-float, market-cap weighted index representing the performance of stocks in both developed and emerging companies globally, with the exclusion of the US.

VXUS includes much more equities (through emerging companies) than VEA.  This is because VEA comprises only developed companies of Europe and the Pacific region.

The All Cap index (that VEA leverages) holds over 4100 equities in 45 countries, while the All Cap index (that VXUS leverages) has over 7700 equities in 65 countries.

 

VEA vs VXUS Fund Composition

VEA vs. VXUS – Industry Exposure

VEA vs VXUS Fund Composition

From this table, the Vanguard FTSE Developed Markets Index Fund ETF Shares (VEA) is a well-diversified index.

It offers most exposure to sectors such as Financial Services, Industrials, Technology, and medium exposure to Healthcare, Basic Materials, Consumer Cyclical, and Consumer Defensive stocks.

Real Estate, Energy, and Communication Services make up less than 20% of the
VEA’s total assets.

Regarding exposure to the Financial Services sector, VXUS offers more exposure (17.39% vs 17.64%), so 0.25% more.

Also, in sectors like Technology, Communication Services, Energy, Consumer Cyclicals, and Basic materials, VXUS is higher compared to VEA.

However, stocks holdings in Industrials, Utilities, Consumer Defensive, and Real Estate VXUS are lower.

 

VEA and VXUS Market Exposure

VXUS Top 10 Countries

VXUS Top 10 Countries

 

VEA Top 10 Countries

VEA Top 10 Countries

 

VEA vs VXUS Fund Holdings

Both VEA and VXUS are International Large Blend funds.  This implies that their holdings may be very similar.

Both funds are likely investing in almost the same investments.

Let’s take a look at the top 10 holdings of each fund.

 

VEA Holdings

VEA Top Holdings

VEA’s Top Holdings include:

  • Nestle
  • Samsung Electronics
  • ASML Holding
  • Roche Holding
  • Toyota Motor

The weight of other companies such as the LVMH, Novartis, and Shopify is slightly smaller than the first category.

Companies with the least weight in the VEA’s holdings include AstraZeneca and SAP SE at 0.67% and 0.66%.

 

VXUS Holdings

VXUS Top Holdings

VXUS’s Top Holdings include:

  • Taiwan Semiconductor Manufacturing
  • Tencent Holdings
  • Alibaba
  • Nestle
  • Samsung Electronics

Following these top holdings are ASML Holding (0.86%), Roche Holding (0.81%), and Toyota Motor (0.67%).

These companies have a slightly smaller weight in the VXUS; however, they are still significant.

LVMH and Novartis have the least weight in the VXUS’s holdings at 0.61% and 0.6%.

 

VEA vs VXUS Performance (Annual Returns)

VEA vs VXUS Performance Comparison

Both VEA and VXUS had a massive breakthrough in 2017 with annual returns of 26.44% and 27.52%, respectively.

From history, 2017 was not just a significant year for the ETFs but the best year so far.

On the other hand, 2018 was another remarkable year for the funds, the worst year, with annual returns of -14.47% for VEA and -14.42% for VXUS.

However, in most years, both the Vanguard FTSE Developed Markets Index Fund ETF and the Vanguard Total International Stock Index Fund ETF performed well.

These funds gave investors modest returns in 2010, 2016, and 2020.

Aside from their best years, they also performed above average in 2012, 2013, and 2019.

This shows you that the two Vanguard ETFs are successful and can be good investments.

 

VEA Description

Name: Vanguard FTSE Developed Markets ETF (VEA)
Structure: ETF
Underlying Index: FTSE Developed ex-US All Cap Index
Inception Date: 2007
Expense Ratio: 0.05%
AUM: $109.38B

Vanguard FTSE Developed Markets ETF (VEA) is a Vanguard fund designed to track the performance of the FTSE Developed All Cap ex US Index using the indexing investment approach.

The underlying index measures the investment return of specific stocks, those issued by companies in major European markets.

The FTSE Developed All Cap ex US Index serves as a benchmark index.  It represents the performance of companies (across all caps) in Developed European markets.

So, VEA tracks an all-market-cap weighted index of developed markets’ equities outside the US.

Stocks are selected and weighted for the index to ensure the holdings are investable, allowing the ETF to track the performance return using a replication strategy.

Index components are reviewed semi-annually in March and September.

In all, VEA offers excellent exposure to the space.

 

VXUS Description

Name: Vanguard Total International Stock ETF (VXUS)
Structure: ETF
Underlying Index: VXUS-US – FTSE Global All Cap ex-US Index
Inception Date: 2011
Expense Ratio: 0.08%
AUM: $53.98B

Similar to VEA, Vanguard Total International Stock ETF (VXUS) tracks the performance of a benchmark index, FTSE Global All Cap ex-US Index.

This index measures the investment return of stocks issued by companies located in developed and emerging markets, excluding the United States.

Furthermore, it is a market-capitalization-weighted index of global stocks, covering nearly the entire world’s global market capitalization, excluding the US.

One of the significant benefits that the VXUS offers is broad exposure.  VXUS holds both developed and emerging equity markets.

The fund employs an indexing investment approach to track the FTSE Global All Cap ex-US Index.

 

VEA vs VXUS Fee Comparison

Especially if you’re new in the world of investing, you should bear in mind that fees are one of the significant factors that affect portfolio growth.

Even the slightest difference can make a huge difference in your portfolio in the long term.

VEA has a lower expense ratio of 0.05% for the two Vanguard funds, while VXUS has an expense ratio of 0.08%.

The difference is not much between these two funds.

Related Posts:

 

VEA vs VXUS Which Vanguard ETF Should You Choose?

The primary difference between VEA and VXUS is that VEA tracks the FTSE Developed All Cap ex-US Index, while VXUS tracks the FTSE Global All Cap ex-US Index.  In simple terms, VXUS includes emerging markets while VEA does not.

With an expense ratio of 0.05%, VEA has a lower cost than VXUS (0.08%).  However, the difference of 0.03%  can be considered negligible.

Another key point to note is volatility.  Both funds are less volatile than the popular S&P benchmark index.

VEA has a beta of 0.91, and VXUS has a beta of 0.94.

In terms of performance, VXUS and VEA are not so different.  Both have shown strong performance in the last 3-5 years.

The return for both ETFs in the last 5 years is 8.78%.

Finally, the choice of which Vanguard ETF is for you to make.

Since a broader exposure gives you an investment advantage, VXUS may be a better choice since it comprises both developed and emerging markets.

However, VXUS is not the best fit for short-term investment purposes.  Instead, it’s most suitable for long-term investment.

 


Disclaimer
This post may have affiliate links, which means I may receive commissions if you choose to purchase through links I provide (at no extra cost to you). Thank you for supporting the work I put into this site!

This information is my opinion and is for information purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.
Fat FIRE: Early Retirement In Style!