When building a three-fund portfolio, choosing the right international ETF is important for diversification and cost efficiency. VXUS (Vanguard Total International Stock ETF) and IXUS (iShares Core MSCI Total International Stock ETF) are two leading options.
Quick Comparison
| Feature | VXUS | IXUS |
|---|---|---|
| Expense Ratio | 0.05% | 0.07% |
| Number of Holdings | 8,646 | 4,131 |
| Dividend Yield | 2.89% | 2.94% |
| Tax Efficiency | Lower QDI, better for tax-advantaged accounts | Higher QDI, better for taxable accounts |
| Benchmarks | FTSE Global All Cap ex US | MSCI ACWI ex USA IMI |
| Developed Markets | 65.2% | 78.84% |
| Emerging Markets | 28.4% | 21.16% |
Expense ratios and holdings are as of February 2026 and are subject to change.
Key takeaway
Choose VXUS for lower fees and broader diversification, especially in tax-advantaged accounts. Opt for IXUS in taxable accounts for better after-tax returns.
No guarantee of future results; all investing involves risk.
VXUS vs IXUS International ETF Comparison Chart
Costs and Expense Ratios
Annual Expense Ratios
VXUS has a lower expense ratio (0.05%) than IXUS (0.07%). Over time, small fee differences can impact overall returns, especially within a three-fund portfolio framework.
Expense ratios are not the only factor to consider; review all fund details before investing.
Assets Under Management
VXUS’s larger asset base may lead to better liquidity and smoother trading. Trading efficiency and liquidity can affect transaction costs.
Past liquidity is not a guarantee of future trading conditions.
Geographic Coverage and Market Exposure
Developed vs. Emerging Markets Allocation
VXUS and IXUS provide international exposure but follow different indices, leading to distinct regional allocations. Both provide diversified exposure, but VXUS includes a larger number of small- and micro-cap companies.
Regional allocations and holdings can change.
| Region | VXUS Allocation | IXUS Allocation |
|---|---|---|
| Europe | 38.20% | 42.40% |
| Asia Pacific/Emerging | 26.80% | 45.96% |
| Pacific (Developed) | 25.60% | Included in Asia Pacific |
| North America (ex-US) | 8.10% | 11.60% |
Dividend Yields and Income Generation
Dividend Yields and Payment Schedules
As of February 2026, IXUS offers a 2.94% yield, and VXUS offers a 2.89% yield. Both distribute dividends quarterly.
Dividend yields are based on trailing 12-month data and may change.
Tax Implications for U.S. Investors
IXUS generally offers a higher proportion of qualified dividend income (QDI), which may be more tax-efficient in taxable accounts. The foreign tax credit may also differ between funds. Consider consulting a tax professional for your specific situation.
Tax consequences vary by individual circumstances.
Performance and Risk Analysis
Historical Returns Comparison
Performance differences between VXUS and IXUS are minor across all timeframes. Their nearly perfect correlation (0.99) means their returns closely align, though slight differences may exist in risk metrics.
| Period | VXUS (Vanguard) | IXUS (iShares) |
|---|---|---|
| 1-Year | 36.69% | 36.80% |
| 3-Year (Annualized) | 17.60% | 17.63% |
| 5-Year (Annualized) | 8.43% | 8.34% |
| 10-Year (Annualized) | 10.68% | 10.74% |
Historical performance is not indicative of future results.
How to Choose Between VXUS and IXUS for Your Portfolio
Diversification Benefits in a Three-Fund Portfolio
For tax-advantaged accounts, VXUS's lower expense ratio may be a key factor. In taxable accounts, IXUS’s higher percentage of qualified dividends may result in better after-tax returns. Both funds are rated as high risk and should be part of a diversified portfolio..
Investment decisions should be based on your financial situation and risk tolerance.
FAQs
How much international stock should I hold in a three-fund portfolio?
- A standard allocation is 20-30% international stocks, but this depends on your goals and risk tolerance.
Does VXUS or IXUS include international small-cap stocks?
- Both include international small-cap stocks, but VXUS has broader coverage.
Can I swap VXUS and IXUS for tax-loss harvesting without triggering a wash sale?
- Swapping these funds is generally not considered a wash sale, but always consult a tax professional.
Related Blog Posts
- How does VXUS’ risk/return profile compare to holding VEA + VWO separately?
- VXUS vs VEA+VWO: 5-year total return and overlap analysis (country/sector/holding overlap).
- VXUS vs VEU vs IXUS - Best total international ETF for one-ticket ex-US exposure
- VWO vs IEMG vs SPEM - Best emerging markets ETF for cost and breadth
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