What is VXUS and how can it benefit my investment portfolio?
VXUS, or the Vanguard Total International Stock ETF, is designed to provide exposure to stocks outside of the United States, which includes companies from both developed and emerging markets.
The ETF tracks the FTSE Global All Cap ex US Index, which covers approximately 99% of the global market capitalization of stocks outside the US, allowing investors to access a broad range of international equities.
Launched on January 26, 2011, VXUS has accumulated a significant asset base, making it one of the larger international equity ETFs available.
The fund holds over 8,500 individual stocks, providing investors with diversification across various sectors and countries, which can reduce the risk associated with investing in single markets.
The median market capitalization of the stocks in VXUS is around $382 billion, indicating that it includes a mix of large-cap, mid-cap, and small-cap companies.
The expense ratio for VXUS is relatively low, which is a common characteristic of Vanguard funds, allowing investors to keep more of their returns.
By investing in VXUS, investors can potentially benefit from geographical diversification, as international markets may perform differently than the US market due to varying economic conditions.
Currency fluctuations play a significant role in the performance of VXUS, as the fund's holdings are denominated in various foreign currencies, which can affect returns when converted back into US dollars.
The fund’s performance is influenced by global economic trends, trade policies, and geopolitical events, which can create both opportunities and risks for investors.
Emerging markets, which are included in VXUS, can exhibit higher growth potential compared to developed markets but also come with increased volatility and risks.
The historical performance of VXUS has shown that international equities can sometimes outperform US equities over certain periods, highlighting the importance of a global investment strategy.
VXUS does not hold US stocks, which means it provides a pure international exposure that can complement a portfolio heavily weighted in US equities.
The fund may distribute dividends, which are paid out to shareholders and can provide a source of income, although the yield may vary based on the underlying holdings’ performance.
Investor sentiment can significantly impact the performance of VXUS, as international markets can become influenced by global trends and investor risk appetite.
The liquidity of VXUS allows investors to buy and sell shares throughout the trading day, providing flexibility compared to mutual funds that only trade at the end of the day.
Market capitalization weighting means that larger companies have a more significant impact on the fund's performance, which can skew results based on the performance of a few major stocks.
The fund's international exposure can serve as a hedge against domestic economic downturns, as other economies may not be as affected by US market conditions.
The structure of VXUS as an ETF allows for tax efficiency, as it can minimize capital gains distributions compared to traditional mutual funds.
Investors can use VXUS to gain exposure to specific themes or sectors that might be more prevalent or growing in international markets, such as renewable energy or technology.
As of March 2025, ongoing developments in international trade agreements and global economic recovery post-pandemic may continue to influence the performance and attractiveness of investing in VXUS.