Vanguard Total International Stock ETF: A Comprehensive Guide

What is the Vanguard Total International Stock ETF?

The Vanguard Total International Stock ETF (VXUS) is an exchange-traded fund (ETF) that tracks the performance of a broad international stock market index. The fund invests in stocks of companies from developed and emerging markets outside the United States.

Why Invest in VXUS?

There are several reasons why investors may consider investing in VXUS:

1. Diversification: VXUS provides investors with a convenient way to diversify their portfolios by investing in a wide range of international stocks.
2. Potential for growth: International stocks have historically offered strong growth potential, especially in emerging markets.
3. Hedging against currency risk: Investing in international stocks can help investors hedge against currency risk, which can impact the value of their domestic investments.
4. Low fees: VXUS has a low annual expense ratio of 0.09%, making it one of the most affordable international ETFs available.

VXUS Performance:

Since its inception in 2007, VXUS has delivered strong returns for investors:

• Over the past 10 years, VXUS has returned an average of 7.7% annually.
• Over the past 5 years, VXUS has returned an average of 10.3% annually.
• Year-to-date in 2023, VXUS has returned over 8%.

VXUS Holdings:

VXUS invests in over 7,000 stocks from companies located in 59 countries outside the United States. The top 10 countries represented in the fund are:

VXUS Fees:

VXUS has a low annual expense ratio of 0.09%, which is significantly lower than the average expense ratio for international ETFs. This means that investors keep more of their investment returns.

Who Should Invest in VXUS?

VXUS is a suitable investment for investors who:

1. Are looking for diversification
2. Believe in the growth potential of international stocks
3. Want to hedge against currency risk
4. Are comfortable with a long-term investment horizon
5. Understand the risks associated with international investing

Risks of Investing in VXUS:

Like all investments, VXUS carries certain risks:

• Currency risk: The value of VXUS can fluctuate based on changes in currency exchange rates.
• Market risk: The value of VXUS can decline in response to market downturns or changes in economic conditions.
• Political risk: VXUS invests in companies from various countries, which can expose investors to political instability or economic sanctions.
• Liquidity risk: VXUS is a relatively large ETF, but it may not always be as liquid as other ETFs, especially during periods of market volatility.

Tips for Investing in VXUS:

Here are some tips for investing in VXUS:

1. Invest for the long term: VXUS is a suitable investment for long-term investors who are comfortable with market fluctuations.
2. Consider dollar-cost averaging: Dollar-cost averaging is a strategy that involves investing a fixed amount of money in VXUS at regular intervals, regardless of the market price. This can help reduce the impact of market volatility on your investment.
3. Rebalance your portfolio regularly: As your investment goals and risk tolerance change, you may need to rebalance your portfolio to ensure that VXUS remains an appropriate investment for you.
4. Diversify within VXUS: VXUS provides diversification across countries, but you may want to further diversify your international exposure by investing in other international ETFs or individual stocks.
5. Monitor the fund regularly: Keep track of VXUS's performance and make adjustments as needed.

Conclusion

The Vanguard Total International Stock ETF (VXUS) is a well-diversified, low-cost ETF that provides investors with access to a broad range of international stocks. VXUS has a strong track record of performance and is suitable for long-term investors who believe in the growth potential of international markets. However, it's important to understand the risks associated with international investing before investing in VXUS.