The Better Buy In An Uncertain Market

Overview Of VXUS And VTI

VXUS and VTI are passively managed funds from Vanguard. While they share the family name, these two funds have very different investment strategies, which means each can play a distinctive role in your portfolio.

Vanguard Total Stock Market Index Fund ETF

VTI tracks the overall U.S. stock market by holding small, medium and large companies spanning all economic sectors and investing styles. The fund is market cap weighted, so the largest companies comprise far more of the portfolio than the smallest ones.

VTI pays a quarterly dividend, and the SEC 30-day distribution yield is currently about 1%.

Vanguard Total International Stock Index Fund ETF (VXUS)

VXUS seeks to replicate the performance of a broad index of foreign stocks. There are no U.S. holdings other than cash and equivalents. The portfolio includes companies in emerging markets, Europe, the Pacific, Middle East and North America. This fund is also market cap weighted.

VXUS pays a quarterly dividend, but the payout can vary dramatically from quarter to quarter. The last four payments have ranged from $1.3631 per share in December to $0.0795 in March.

Key Metric Comparisons

Comparing VTI and VTUS on historic performance, fees and holdings can help you determine if or how these funds fit into your investing plan.

Performance

Over the past 10 years, VTI has outperformed VXUS, returning an annual average of 14.73% versus VXUS’s 9.39%. The numbers align with a broader trend: U.S. mega-cap technology stocks have handily outpaced the rest of the world for nearly 20 years. But the markets have a way of rebalancing themselves, and international companies are now closing the gap.

This shift has benefited VXUS. The international stock fund has grown more than 34% over the last year and about 10% year to date. Both metrics are higher than VTI’s one-year and year-to-date returns of 31.4% and 6%.

Fees

Most Vanguard funds, including these two, have efficient expense ratios. VTI’s expense ratio is 0.03% and VXUS’s expenses total 0.05%. For context, those percentages equate to $3 and $5 annually per $10,000 invested. International funds often have higher expense ratios than domestic ones, because their research, trading and currency costs are higher.

Holdings And Diversification

VTI holds nearly 3,500 U.S. stocks across all economic sectors. Technology has the most representation, comprising 39.3% of the portfolio. The top two holdings, Nvidia (NVDA) and Apple (AAPL), make up more than 12%. After technology, the fund’s most represented sectors are consumer discretionary at 13.4%, industrials at 12.4%, and financials at 10.3%.

VXUS has 8,770 international stocks in its portfolio. Japan is the most-represented country, followed by the United Kingdom, Canada and Taiwan. Taiwan Semiconductor is the top holding and comprises 3.84%. The second-largest holding, Samsung Electronics, accounts for 1.61% of the portfolio.

VXUS has a more efficient portfolio P/E ratio of 17.5 compared to VTI’s 26.7. International stocks have had broadly lower valuations in recent years, and it has attracted more investors to the segment.

How These Funds Perform In Uncertain Markets

VTI and VXUS rise and fall with macro trends. A look back at how these funds have performed during major crises shows both are prone to declines when uncertainty is high.

VXUS was launched in 2011 after the global financial crisis, so there’s no direct comparison of the two funds for that era. However, an analysis by Dodge & Cox concluded that international stocks outperformed U.S. stocks by 56 percentage points between 2001 and 2010.

VTI did recover from the GFC much faster than VXUS. Specifically, VTI gained 46.4% between 2011 and 2013, while VXUS grew 5.2%.

More recently, comparative performances have been mixed:

• In 2020, VXUS fell faster during the COVID-19 crisis than VTI and recovered more slowly.
• In 2022, VXUS declined 18.2%, while VTI dropped 21.1%. U.S. tech stocks fell hard and fast that year due to elevated interest rates and high inflation.
• In the first four months of 2026, VXUS gained 10% and VTI rose 6%. Catalysts include changing U.S. trade policies, war spending and improving macroeconomic conditions in Europe.

For these two funds, the value of the U.S. dollar is more influential than broad uncertainty. VXUS is likely to shine when the U.S. dollar weakens, while VTI might do better in major global crises — when safe-haven demand for the dollar increases.

VXUS Vs VTI Tax Considerations

The primary tax differences between VXUS and VTI are the availability of the foreign tax credit and the tax rate on dividends. If you are holding VXUS in a taxable account, you should be able to claim a foreign tax credit to offset your U.S. tax liability. That’s an advantage for the international fund.

However, more than 40% of VXUS dividends are nonqualified, which means they’re taxed as ordinary income. The rate can be as high as 37%, depending on your income. This is a tax disadvantage for VXUS.

VTI does not qualify for a foreign tax credit, but nearly 94% of its dividends are qualified and taxed as long-term capital gains. These rates range from 0% to 20%.

Which Is The Better Buy For Your Portfolio?

Your target asset allocation should dictate whether you own VTI, VXUS or both. VTI’s broad exposure to U.S. stocks makes it a suitable core holding, while VXUS can provide important diversification benefits. For those reasons, most investors will own both or VTI by itself.

If you have another U.S. fund or a collection of U.S. stocks but no international exposure, VXUS could be a useful portfolio addition.

VTI gives you access to U.S. stocks and VXUS provides exposure to the rest of the world. Both funds are cost-efficient and well-diversified. They are solid, complementary contenders for a low-maintenance, fund-based portfolio.