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VXUS vs VT: Which ETF Is Right For You?

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We are going to explore the difference between Vanguard Total International Stock ETF (VXUS) vs Vanguard Total World Stock ETF (VT).

There is no shortage of options when it comes to investing in Exchange Traded Funds (ETFs).  Choosing between two funds can be difficult, but I will make it easy for you to decide between VXUS and VT.

VXUS vs VT Graphic

 

VXUS vs VT

The primary difference between VXUS and VT is the asset allocation of the exchange-traded fund (ETF). 

VXUS = 100% International Stocks

VT = 60% U.S stocks / 40% International Stocks

Another significant difference is the number of stocks in each, with VT having 9299 different companies in the index compared to 7765 with VXUS.

VT:

  • Tracks the performance of the FTSE Global All Cap Index
  • Has an expense ratio of 0.08%
  • No minimum initial investment
  • Holds 9299 stocks

VXUS:

  • Tracks the performance of the FTSE Global All Cap ex-US Index
  • Has an expense ratio of 0.08%
  • No minimum initial investment
  • Holds 7765 stocks

 

VXUS vs VT Performance

VXUS and VT have performed very differently over the last 10 years with VT beating VXUS by more than 4% annually.  That is a significant difference, especially when you consider compound interest on those returns.

Similarities between VXUS and VT:

  • Exchange-Traded Funds (ETFs)
  • Low Expense Ratios
  • Well Diversified

 

Here is how their performance compares:

VXUS vs VT Performance

VXUS (Blue)          VT (Yellow)

As you can see, VT has significantly outperformed VXUS over the years.  However, this doesn’t necessarily mean this trend will continue.

 

VXUS and VT Differences

VXUS vs VT primarily differ in that VT includes U.S-based companies with some international companies as well.  Vanguard Total International Stock ETF (VXUS) holds a collection of stocks from companies around the world excluding the United States. 

VT also has more holdings in the index compared to VXUS.  By investing in an ETF with more holdings you are helping diversify your portfolio and minimize risk.

Differences between VXUS and VT:

  • Different Number Of Holdings (~7765 vs ~9299)
  • Asset Allocation (Domestic vs International)

 

VT Profile

  • Fund Inception: 2008
  • Expense Ratio: 0.08%
  • Number Of Stocks: ~9299
  • Top 10 Holdings: 14%
  • Equivalent Admiral Fund (VTWAX)

 

Here are the top 10 holdings for Vanguard Total World Stock ETF (VT):

VT Top 10 Holdings

VT is largely made up of Apple, Microsoft, Google, Amazon, and Facebook.

Over the last 10 years, VT has underperformed the S&P 500 with an average return of 12% per year compared to 16.5% from the S&P 500.

VT has about 32B in net assets.  It has underperformed over the last 10 years but again there is no guarantee the next 10 years look the same.

 

No Minimum Investment

VXUS and VT are both exchange-traded funds (ETFs) which means there is NO minimum investment.  Investors looking to buy fractional shares can use platforms like M1 Finance. ***(Get $50 When You Use This Link)***

Normally, fractional shares are not available for ETFs but with M1 Finance you can purchase fractional shares with no commission.

Buying fractional shares allows you to maximize your investment.  You no longer have to keep your money sitting idle until you have enough to purchase a full share.  This is especially beneficial when it comes to stocks with high share prices like Tesla, Amazon, and Google as examples.

 

VT Historical Returns

Take a look at the historical chart below.  You can see that VT has underperformed the S&P 500 over the last 10 years.

VT vs S&P 500 Performance

VT (Blue)          S&P 500 (Yellow)

However, be mindful that this does not guarantee the next 10 years will look the same.

 

VXUS Profile

  • Fund Inception: 2011
  • Expense Ratio: 0.08%
  • Number Of Stocks: ~7765
  • Top 10 Holdings: 9%
  • Equivalent Admiral Fund (VTIAX)

 

The Vanguard Total International Stock ETF (VXUS) provides investors with exposure to developed and emerging non-U.S. equity markets.  The ETF is comprised of companies located mostly in emerging markets, Europe, and Pacific markets.

VXUS was created in 2011 and currently has an expense ratio of 0.08% which makes it a low-cost ETF to own.  It has the same expense ratio as VT (0.08% expense ratio).

Therefore, there is no difference in the cost of owning VXUS vs VT.  They are both low-cost ETF options so paying attention to performance and desired assets allocation is more important. (international vs domestic)

Moving on, here are the top 10 holdings for VXUS:

VXUS Top 10 Holdings

VXUS is largely made up of Taiwan Semiconductor Manufacturing, Tencent Holdings, Nestle, Samsung, and ASML Holding.

Over the last 10 years, VXUS has underperformed the S&P 500 with an average return of 7.9% per year compared to 16.5% from the S&P 500.

VXUS has about 404B in net assets.  It has underperformed over the last 10 years but again there is no guarantee the next 10 years look the same.

 

Which is Better VXUS or VT?

VXUS and VT are different investments.  VXUS offers more international exposure compared to VT since it excludes United States companies.  However, this has resulted in a lower performance over the last 10 years.

Even so, I would say both can be great options for long-term investors depending on your investment goals.  If having an asset allocation that only includes international stocks at the lowest fees helps you sleep at night, then VXUS would be a great option.  If you are looking for a more balanced portfolio with both U.S based companies and international companies, then VT allows you to easily invest in that asset allocation at a very low cost.

I think both VXUS and VT can have a place in a long-term investors portfolio.

Lastly, it’s important to consider costs and fees because they can add up in the long run.  That’s why it’s so important to purchase and sell your shares commission-free.

Again a great way to do this is with M1 Finance or by using the Vanguard platform directly for these ETFs.  You can purchase fractional shares for free with M1 Finance and they give you the ability to buy VT, VXUS, and thousands of other stocks/ETFs.

 

Is VXUS or VT Better for Financial Independence?

Both VT and VXUS can get you to Financial Independence Retire Early (FIRE).  They both have performed great and have low expense ratios.

Being part of the FIRE community I know we aim for the lowest fees possible and we’re a big fan of Vanguard.

 

My Winner: VT

My winner is VT for its diversification in domestic and international stocks.  VT’s expense ratio is also very low.

However, as I mentioned I believe you can invest in both depending on your desired asset allocation.

Lastly, both ETFs are Vanguard funds which likely means they will continue to offer low-cost ETFs and can be purchased commission-free from the vanguard platform or M1 Finance.

If you like comparisons like these, you can also look at some other popular ones like VXUS vs VTIVGT vs QQQ, and VTI vs QQQ.

 


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.