VXUS Has Delivered Better Returns Than IEFA Over the Past 5 Years. Should It Be in Your Portfolio?

In 2026, the Vanguard Total International Stock ETF (NASDAQ: VXUS) has returned 11.5% compared to a 7.9% summation for the iShares Core MSCI EAFE ETF (NYSEMKT: IEFA). That year-to-date outperformance has pushed the Vanguard ETF up connected a trailing one-, three-, five-, and 10-year basis.

Both planetary exchange-traded funds (ETFs) put successful a wide assortment of overseas stocks, but the biggest quality is the markets they put in. The iShares Core MSCI EAFE ETF holds much than 2,600 stocks, but they're each from developed markets. The Vanguard Total International Stock ETF holds 8,700 stocks, spanning some developed and emerging markets.

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The prime betwixt them comes down to whether you privation emerging markets exposure. I similar the ETF that owns those markets.

iShares Core MSCI EAFE ETF

This ETF tracks the MSCI EAFE IMI Index. It invests successful companies of each sizes from developed markets extracurricular the United States and Canada. It's broad vulnerability to these countries with an disbursal ratio of conscionable 0.07%, 1 of the lowest successful this category.

The apical 5 holdings presently are:

1. ASML Holdings (2.44% of the index)

2. HSBC Holdings (1.26%)

3. Roche (1.15%)

4. AstraZeneca (1.12%)

5. Novartis AG (1.12%)

The money has much than 60% of its assets successful the eurozone, truthful the adjacent large catalyst could travel from there. I spot European defence spending perchance providing the upside push. By 2035, NATO allies person committed to spending 5% of GDP annually connected halfway defense, up from the 2% request successful spot today. The biggest percent of spending maturation is apt to travel from Europe and Canada, which accrued an estimated 16% twelvemonth implicit twelvemonth successful 2025.

This ETF has astir 20% of its assets invested successful industrials, the second-largest assemblage holding.

Vanguard Total International Stock ETF

This ETF follows the FTSE Global All Cap ex US Index. It targets virtually each investable banal extracurricular of the United States. Canada, which is absent from the iShares ETF, accounts for 8% of this fund. Emerging markets are 27% of the portfolio.

The apical 5 holdings presently are:

1. Taiwan Semiconductor Manufacturing (4.25% of the index)

2. Samsung (1.79%)

3. ASML Holdings (1.42%)

4. SK Hynix (1.22%)

5. Tencent Holdings (0.95%)

The added vulnerability to tech and emerging markets is evident successful the apical holdings. But I deliberation China and Taiwan could beryllium differentiators going forward. Chinese stocks are connected the downswing again arsenic slowing growth, geopolitical tensions, and commercialized tensions stay risks. Both countries are dense importers of oil, and immoderate prolonged struggle successful the Middle East could resistance connected returns.