International ETFs: VXUS Chases Global Growth While IEFA Prioritizes Predictability

Core Insights - Vanguard Total International Stock ETF (VXUS) includes emerging markets, while iShares Core MSCI EAFE ETF (IEFA) focuses solely on developed markets, offering a marginally higher yield and lower volatility [1][2] Cost & Size Comparison - VXUS has an expense ratio of 0.05% compared to IEFA's 0.07% - As of January 30, 2026, VXUS has a 1-year return of 29.5% and a dividend yield of 3.1%, while IEFA has a 1-year return of 26.6% and a dividend yield of 3.5% - VXUS has assets under management (AUM) of $573.7 billion, significantly higher than IEFA's $162.6 billion [3][4] Performance & Risk Comparison - Over the past five years, VXUS experienced a maximum drawdown of -29.43%, while IEFA had a drawdown of -30.41% - An investment of $1,000 would have grown to $1,297 in VXUS and $1,353 in IEFA over the same period [5] Fund Composition - IEFA holds 2,589 stocks from developed markets, with major sectors being financial services (22%), industrials (20%), and healthcare (11%), featuring top positions like ASML, Roche, and HSBC [6] - VXUS contains over 8,600 stocks from both developed and emerging markets, with significant exposure to financial services, industrials, and technology, including major positions like Taiwan Semiconductor Manufacturing, Tencent, and ASML [7][9] Market Performance Context - International stocks surged over 30% in 2025, significantly outperforming U.S. markets, driven by a weaker dollar and attractive valuations abroad, with both VXUS and IEFA benefiting from these gains [8] - VXUS provides a broader investment scope, capturing both developed and emerging markets, while IEFA selectively focuses on developed markets, trading off higher growth potential for reduced risk [10]