Smart Investors Are Adding VXUS as International Stocks Surge Past U.S. Benchmarks

"VXUS tracks the FTSE Global All Cap ex US Index, which means it owns essentially every investable stock outside the United States. Developed markets like Canada, Europe, and Japan sit alongside emerging markets including China and India. The fund holds thousands of positions, and even its largest holding, Royal Bank of Canada at 0.54% of the portfolio, barely registers as a concentration risk."

"The return engine here is straightforward: you are buying the earnings growth and valuation expansion of non-U.S. businesses. VXUS also pays a 2.86% dividend yield, which adds a meaningful income component. The fund's 0.05% expense ratio means almost none of that return gets eaten by fees, which matters over a 20-year holding period."

"Over five years, domestic stocks have meaningfully outpaced international ones, and the gap widens further over a decade. The long-run underperformance of VXUS relative to VTI is real and structural. U.S. companies have held durable advantages in earnings growth and capital returns that international markets have not matched over the same period."

VXUS tracks the FTSE Global All Cap ex US Index, providing exposure to thousands of stocks across developed and emerging markets with minimal concentration risk. The fund's 0.05% expense ratio and 2.86% dividend yield make it an efficient income-generating vehicle. While VXUS returned 32% over the past year compared to VTI's 22%, this recent outperformance requires context. Over five-year and ten-year periods, U.S. stocks have significantly outpaced international stocks. U.S. companies maintain structural advantages in earnings growth and capital returns that international markets have not matched historically.

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