Two of the most widely held global equity ETFs, VXUS and VT, offer broad international exposure but differ significantly in structure, cost, and holdings. Investors seeking global diversification must weigh these distinctions for optimal portfolio alignment.
- VXUS excludes U.S. equities; VT includes them, resulting in different global exposure
- VXUS expense ratio: 0.07%; VT expense ratio: 0.07% (same fee, different universe)
- VT holds approximately 4,600 securities; VXUS holds about 3,800
- U.S. stocks make up 58% of VT’s portfolio; VXUS has zero U.S. exposure
- VXUS allocates 57% to developed markets and 43% to emerging markets
- VT’s emerging market allocation is 49%, with higher exposure to large-cap U.S. growth stocks
VXUS and VT are two leading exchange-traded funds providing exposure to international equities, but they diverge in critical ways that impact investor outcomes. VXUS, offered by Vanguard, tracks the FTSE All-World ex-US Index, excluding U.S. stocks and focusing on developed and emerging markets outside the United States. VT, also from Vanguard, tracks the FTSE All-World Index, which includes both U.S. and international equities, offering a truly global mandate. The expense ratios highlight a key differentiator: VXUS has a 0.07% annual fee, while VT’s fee is slightly lower at 0.07%. However, VT’s broader universe includes approximately 4,600 holdings, compared to VXUS’s roughly 3,800. This difference affects diversification and concentration risk, with VT offering more exposure to large-cap U.S. companies like Apple, Microsoft, and Amazon—accounting for over 18% of its total weight. In terms of regional allocation, VXUS allocates 57% to developed markets (including Japan, Germany, and the UK) and 43% to emerging markets (such as China, South Korea, and India). VT’s breakdown is 51% developed and 49% emerging, with a stronger tilt toward U.S. equities due to their inclusion. As of recent data, U.S. stocks represent about 58% of VT’s portfolio, whereas VXUS has no U.S. exposure. These structural differences impact risk and return profiles. Investors seeking pure international diversification may favor VXUS to avoid U.S. market dominance, while those aiming for a complete global equity basket may prefer VT. The choice affects portfolio volatility, sector exposure, and long-term growth potential, particularly in high-growth emerging markets.