What VXUS actually is

VXUS is Vanguard’s ETF for stocks outside the United States. It follows the FTSE Global All Cap ex US Index, a float-adjusted, market-capitalisation-weighted index of companies in developed and emerging markets, excluding the US. The fund invests all, or substantially all, of its assets in the stocks in its target index.

It launched in 2011 and trades on the Nasdaq.

What is inside

Thousands of companies of every size across Europe, Japan, Canada, Australia and also emerging markets such as China, India and Taiwan. Compared with a fund such as VEA, VXUS adds emerging markets to the developed ones.

Distributions

International companies often pay out a larger share of profit than US growth companies, so the yield is typically higher than for US stock funds. Foreign dividends can be subject to withholding tax, which varies by country. Check the fund’s current yield, fees and distribution schedule on the issuer’s website, because they change.

What to keep in mind

  • Currency risk. Returns depend on exchange-rate moves.
  • Emerging-market risk. Political and market risks are higher.
  • Slow periods. International stocks have often lagged the US over long stretches.
  • Overlap with other funds. It includes what a developed-markets fund plus an emerging-markets fund would hold.

Quick take

VXUS is a one-fund way to get the rest of the world outside the US. It pairs naturally with a US fund and a bond fund.