
VEU Vs. VXUS: Which Of These Vanguard ETFs Is Best For Those Looking To Diversify?
Both VEU and VXUS are excellent international ETFs with unique benefits depending on your investment ... More priorities and existing portfolio composition.
Investor concerns over the breakout of a global tariff war have eased after the White House announced a 90-day pause on new duties and negotiations with over 75 countries on trade deals. If successful, these negotiations could prevent trade reduction, supply-chain disruptions, and a rise in consumer prices. These negotiations underscore why international diversification is essential to reduce reliance on a single market.
For investors seeking to diversify their portfolios with an international ETF, VEU and VXUS, both offered by Vanguard, are top contenders. These funds both offer international exposure, void of U.S. holdings, but they differ in their strategy, national exposure and number of holdings. By understanding the key differences between these funds and in which situations either would be preferable, investors can choose the right fund for their portfolio.
In this guide, you'll learn how VEU and VXUS differ by market exposure, expense ratio, holdings and more, as well as how to make the final determination of which fund is right for you.
VEU and VXUS are both ETFs made up of international stock holdings from Vanguard, the firm known for revolutionizing low-cost investing with Vanguard index funds, intended to offer investors exposure to non-U.S. stocks. Both funds can be used to diversify your portfolio with international stocks, each with unique strategies to accomplish this goal.
VEU tracks the FTSE All-World ex-US Index which provides broad exposure to developed and emerging markets outside of the United States. VEU has over 3,000 holdings from Europe, Asia and Latin America providing significant exposure to international markets. VEU makes it easy to gain international exposure while avoiding overlap with U.S. stocks, including the best stocks for 2025.
This ETF is ideal for investors seeking broad diversification in international markets with a focus on large and mid-cap stocks. VEU is more focused on developed markets than emerging markets and its large positions include Taiwan Semiconductor, Tencent, SAP, Alibaba, and Novo Nordisk. VEU has a low expense ratio of just 0.04% and net assets of $59.54B.
VXUS tracks the FTSE Global All Cap ex-US Index which includes small, mid and large-cap stocks from across the world with the exception of the United States. This ETF provides broader exposure to international stocks than VEU with more exposure to small-cap stocks and emerging markets than VEU. With holdings of over 7,000 stocks, VXUS is ideal for investors seeking more granular market exposure.
VXUS' primary holdings overlap with VEU including Taiwan Semiconductor, Tencent, SAP, Alibaba, and Novo Nordisk but with slightly lower percentage holdings in these than VEU as it has more total holdings. Like VEU, VXUS' primary sector holdings include Financial Service, Industrials, Technology, Consumer Cyclical and Healthcare. VXUS has higher net assets than VEU of $455.42B and a slightly higher expense ratio of 0.05%
VEU and VXUS both provide international exposure but they differ in their strategies and holdings. VEU's holdings are concentrated in mid and large-cap stocks in developed and emerging markets. This ETF excludes U.S. stocks and also has fewer holdings.
VXUS provides more broad exposure with small-cap holdings in addition to mid and large-cap stocks. This fund composition provides more diversification to investors and is ideal for investors seeking more complete international exposure. While its inclusion of small-cap stocks can increase volatility, it also can offer greater potential for growth.
Datawrapper link: https://datawrapper.dwcdn.net/Jmn1O/1/
VEU has holdings of over 3,000 stocks from more than 45 countries with the exception of the U.S. This fund has more concentrated holdings in developed markets with heavy weightings in Europe and Asia. While it does provide emerging market exposure, it provides less than VXUS.
VXUS has holdings of over 7,000 stocks with broader exposure across emerging markets than VEU with more diversity in market capitalizations of its holdings. These attributes make VXUS more ideal for investors seeking full international exposure.
In light of recent tariff news, VEU's limited allocation to small cap stocks, many in emerging markets, may serve as a risk if trade deals aren't reached with specific trading partners like the EU for example. VXUS' broader inclusion of small caps and emerging market holdings may reduce the effect of any one region's tariffs.
VEU and VXUS both boast low expense ratios with VEU charging just a 0.04% expense ratio and VXUS charging 0.05%. While both funds are cost-effective, VEU's marginally lower cost may appeal to more investors seeking to minimize fees. For investors seeking broader diversification, VXUS' higher fee may be worthwhile.
VEU maintains lower trading volume than VXUS which may result in wider bid-ask spreads. Long-term investors won't be as affected by this difference but it is relevant for traders who need higher liquidity from their ETFs. VXUS offers greater liquidity and higher trading volume than VEU, making it also more ideal for institutional investors.
Both VEU and VXUS offer attractive dividend yields with VXUS edging out VEU with a 3.15% yield versus 3.03%. For investors seeking more income from funds in their portfolio, VXUS may be preferable. Dividend yields can change year to year due to payouts from holdings.
VEU and VXUS have had similar performance over the last 10 years due to similar holdings and primary exposure to the same markets. Despite this common trend, VEU has outperformed VXUS in both the short and longer term. VEU's 1-year return is 7.02% while VXUS' 1-year return is 6.62%.
Likewise, VEU's 3-year return is 5.00% while VXUS returned 4.58%. In comparison, VOO, Vanguard's S&P 500 ETF had a 1-year return of 6.93% and a 3-year return of 8.81%. Despite VOO's outperformance in the 3-year return, VEU and VXUS can offer valuable diversification for domestic-heavy portfolios.
For more information on two of the primary U.S. ETFs offered by Vanguard to consider, read this helpful guide: VTI vs VOO.
Investors should choose VEU or VXUS based on their investing objectives, portfolio composition and risk tolerance. If you want a fund with a history of higher performance and more concentration in developed markets, VEU would be a better fit. If you prefer broader international exposure and more diversification in cap size, VXUS is a better fit.
You want a fund with more focus in large and mid-cap stocks but without U.S. exposure. VEU is also a better fit if you wish to invest in larger, established international stocks with a lower expense ratio and a better history of performance. VEU could also be the right fund for you if you wish for lower volatility in the portfolio and less portfolio churn due to less exposure to small-cap stocks and stocks from developing nations.
You want broader international market exposure with more small-cap and emerging market stocks. For investors seeking more total-market exposure with a higher dividend yield, VXUS is an ideal fit. If you're also seeking more liquidity in your fund and slightly tighter bid-ask spreads, choose VXUS.
VXUS may also be a better fit for investors who want more diversification in their international fund, have a longer time horizon, and can tolerate more volatility for potentially higher long-term gains.
Bottom Line
Both VEU and VXUS are excellent international ETFs with unique benefits depending on your investment priorities and existing portfolio composition. VXUS is a superior fit for investors seeking broad market exposure and higher yield. VEU is a better fit for investors who are conscious of fees, want to invest primarily in international blue-chip stocks, and prefer a history of higher performance. Ultimately, both ETFs provide strong international exposure so your selection will be determined by how much you weigh the marginal differences in these ETF's features.
Yes, VXUS includes holdings from emerging markets including China, Brazil and India.
VXUS offers slightly better long-term growth potential due to small-cap and emerging market stocks being included in its index.
Both VEU and VXUS are tax efficient, as ETFs are more tax efficient than index funds. Both ETFs are subject to foreign tax withholding if you're a U.S. investor.
It would be unnecessary to hold both VEU and VXUS as these ETFs have significant overlap in their holdings and purpose so it would be more efficient to hold just one.
Hashtags

Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
13 minutes ago
- Yahoo
I'm 52 with $650,000 in cash sitting in a safe at home - What do I do with this pile of money?
Moneywise and Yahoo Finance LLC may earn commission or revenue through links in the content below. Anyone who lived through the Great Recession remembers the tremendous economic turmoil that took place. While the economy has since recovered, many people became wary of financial institutions. Some even choose to hold their cash outside the system entirely. Thanks to Jeff Bezos, you can now become a landlord for as little as $100 — and no, you don't have to deal with tenants or fix freezers. Here's how BlackRock CEO Larry Fink has an important message for the next wave of American retirees — here's how he says you can best weather the US retirement crisis Nervous about the stock market in 2025? Find out how you can access this $1B private real estate fund (with as little as $10) This isn't surprising. There were two bank failures in 2024, and recent tariff-driven recession fears might pave the way for more in the years to come. "Banks are a reflection of the economy — if the economy worsens, their results will follow," said Stephen Biggar, director of financial institutions at Argus Research. But, keeping your money out of banks or investments, you could miss out on significant growth. Holding cash reserves means you're likely losing money every year due to inflation. You can deposit large sums of cash, but banks must report amounts over $10,000 and may ask about the source of funds. There's no issue — as long as your money is legitimate . Just avoid breaking up deposits to dodge reporting, as that's illegal. Notify your bank ahead of time, and remember FDIC insurance covers up to $250,000 per account category. Holding onto cash can mean missing out on opportunities for growth. By exploring secure, high-yield savings options and investing platforms, you can maximize your money's potential and put it to work for your future. If you're looking for a dependable way to grow your savings without taking on significant risk, a certificate of deposit (CD) could be a good choice. Read more: Rich, young Americans are ditching the stormy stock market — While banks may have lost consumer trust during the Great Recession, avoiding the financial system entirely can be a missed opportunity. For instance, $100,000 invested in an S&P 500 index fund in 2009 could have grown to $850,000 by 2024, assuming dividends were reinvested. While it's natural to feel cautious about investing, the truth is that long-term, steady investment strategies often yield the best results. With Vanguard, you can connect with a personal advisor who can help assess how you're doing so far and make sure you've got the right portfolio to meet your goals on time. Vanguard's hybrid advisory system combines advice from professional advisers and automated portfolio management to make sure your investments are working to achieve your financial goals. All you have to do is fill out a brief questionnaire about your financial goals, and Vanguard's advisers will help you set a tailored plan, and stick to it. Once you're set, you can sit back as Vanguard's advisors manage your portfolio. Because they're fiduciaries, they don't earn commissions, so you can trust that the advice you're getting is unbiased. Planning for retirement requires careful consideration of both stability and growth. Whether you're diversifying with precious metals or automating investments, there are options to suit every approach. Gold has long been hailed as one of the best investments for retirement, acting as a hedge against inflation and economic fluctuations. The yellow metal's performance speaks for itself — gold prices have risen by about 84% over the last five years. One way to invest in gold that also provides significant tax advantages is to open a gold IRA with the help of Thor Metals. Gold IRAs allow investors to hold physical gold or gold-related assets within a retirement account, thereby combining the tax advantages of an IRA with the protective benefits of investing in gold, making it an attractive option for those looking to potentially hedge their retirement funds against economic uncertainties. To learn more, you can get a free information guide that includes details on how to get up to $20,000 in free metals on qualifying purchases. JPMorgan sees gold soaring to $6,000/ounce — use this 1 simple IRA trick to lock in those potential shiny gains (before it's too late) Are you rich enough to join the top 1%? Here's the net worth you need to rank among America's wealthiest — plus a few strategies to build that first-class portfolio You're probably already overpaying for this 1 'must-have' expense — and thanks to Trump's tariffs, your monthly bill could soar even higher. Here's how 2 minutes can protect your wallet right now Access to this $22.5 trillion asset class has traditionally been limited to elite investors — until now. Here's how to become the landlord of Walmart or Whole Foods without lifting a finger This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
Yahoo
20 minutes ago
- Yahoo
USTR eases proposed penalties, fees for non-US LNG tankers, vehicle carriers
By Lisa Baertlein LOS ANGELES (Reuters) -The U.S. Trade Representative softened fee proposals for non-U.S.-built LNG tankers and car carriers amid its ongoing effort to counter China's dominance on the high seas and revive domestic shipbuilding. The revised proposal, unveiled by USTR on Friday, would remove LNG-related penalties for failing to export a percentage of fuel on U.S.-owned ships. It also would reduce fees when foreign-built car carriers visit domestic ports and exempt those vessels when they are serving the U.S. military. USTR previously exempted ships carrying U.S. exports as well as operators of smaller ships from port fees originally aimed at China-linked vessels. The agency also exempted vessels that service the Great Lakes, Caribbean and U.S. territories. "This is a step in the right direction, and we look forward to working with USTR on a solution that ensures U.S. LNG remains competitive on the global stage," Rob Jennings, vice president of natural gas markets for the American Petroleum Institute, said on Monday. USTR caught the liquified natural gas industry off guard in April with new rules for outbound shipments of that fuel, sparking an outcry. It also surprised the vehicle carrier industry with a plan to impose port fees on all non-U.S.-built vessels in that segment - including U.S.-flagged and U.S.-crewed ships admitted to the U.S. Maritime Security Program (MSP) that supports Washington's military readiness. USTR on Friday removed language saying it could suspend LNG export licenses until its rules for moving a percentage of outgoing shipments on U.S.-built and operated vessels were met. On April 17, USTR said LNG producers would have to transport 1% of their exports on U.S.-built ships starting in April 2029. That percentage would escalate to 15% in April 2047 and beyond. The World Shipping Council, whose members vehicle carriers such as Norway's Wallenius Wilhelmsen, did not immediately comment on the revisions. The vehicle carrier fee effective October 14 was to be $150 per car capacity of a non-U.S.-built ship known as roll-on/roll-offs, or RoRos. Typical RoRos have capacity to carry nearly 5,000 vehicles. In the revision, USTR lowered that fee to $14 per net ton. It also exempted vessels in the MSP, as well as U.S. government cargo - matching previous exemptions made for other vessel segments. Companies with ships in the MSP include Florida-based American Roll-On, Roll-Off Carrier Group, a U.S.-flag operator of vehicle carriers that is part of Wallenius Wilhelmsen Group, which did not immediately comment. The RoRo fees come on top of steep, 25% fees on auto imports imposed by Trump. These affect mainly European vehicles. U.S. exporters also use RoRos to export U.S.-made BMW SUVs, John Deere tractors and other goods. Shipping industry groups and attorneys have said USTR overreached by levying fees on RoRos made in countries that were not part of the Biden administration's fast-track investigation into China. The USTR's revisions continued to reference "non-U.S. built" vehicle carriers. Interested parties, which were not previously given the opportunity to comment on rules for RoRos or LNG tankers, have until July 7 to submit feedback on the revisions. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data


Bloomberg
27 minutes ago
- Bloomberg
BlackRock, Vanguard Fight High-Stakes Texas Collusion Case
The world's largest asset managers urged a federal judge in Texas to dismiss a lawsuit brought by Republican state attorneys general claiming they colluded to reduce coal output, in a case that threatens how US firms oversee trillions of dollars. Lawyers for BlackRock Inc., Vanguard Group Inc. and the asset management arm of State Street Corp. argued at a hearing Monday that the lawsuit lacked sufficient evidence and that the firms did nothing to attempt to influence coal companies.