Vanguard (VXUS) vs. iShares (EEM): Which ETF Is Better For Investing in Stocks Outside the U.S.?

The Vanguard Total International Stock ETF (VXUS) and the iShares MSCI Emerging Markets ETF (EEM) present distinct investment strategies, with VXUS focusing on broad international exposure and EEM targeting concentrated holdings in emerging markets. While EEM has a higher expense ratio and a tech-heavy portfolio, VXUS offers lower costs and a higher dividend yield, making it a more appealing option for long-term investors.

Performance metrics reveal that VXUS has outperformed EEM since 2011, delivering annualized returns of 6.7% compared to EEM’s 4.2%. VXUS also boasts a more diversified portfolio with over 8,600 holdings, reducing exposure to geopolitical risks associated with concentrated positions like Taiwan Semiconductor Manufacturing, which comprises 14% of EEM.

For market professionals, the clear takeaway is that VXUS may be the preferable choice for those seeking a balanced, cost-effective international equity exposure, especially given its superior historical performance and lower risk profile.

Source: fool.com