Vanguard Total International Stock Fund: A Comprehensive Guide to Invest Globally

The Vanguard Total International Stock Fund (VXUS) is a widely diversified mutual fund that provides exposure to the entire non-US stock market. With over $100 billion in assets under management, VXUS is one of the largest international stock funds available to investors.

What is the Vanguard Total International Stock Fund (VXUS)?

VXUS is a passively managed index fund that tracks the FTSE Global All Cap ex US Index. This index represents over 99% of the non-US stock market, covering developed and emerging markets.

Key Features of VXUS

• Diversification: VXUS provides instant diversification across multiple countries, sectors, and company sizes. Investing in VXUS is like buying a piece of the entire world's stock market.
• Low Cost: With an expense ratio of just 0.09%, VXUS is exceptionally cost-effective. Its low fees allow investors to maximize their potential returns over time.
• High Liquidity: VXUS is a highly liquid fund, meaning investors can easily buy or sell their shares whenever they wish. The fund trades actively throughout the day.
• Tax Efficiency: VXUS is a tax-efficient fund for non-US investors. The fund distributes dividends outside the US, which means it is not subject to US withholding tax.

Benefits of Investing in VXUS

Investing in VXUS offers several benefits to investors:

• Global Exposure: VXUS provides exposure to the potential growth opportunities of emerging markets. By owning VXUS, investors can tap into countries and companies that are not available to them in their home markets.
• Market Diversification: Diversifying your portfolio internationally can help reduce overall risk. The performance of international stocks often differs from US stocks, providing a natural hedge against domestic market fluctuations.
• Long-Term Growth Potential: Historically, international stocks have outperformed US stocks over the long term. By investing in VXUS, investors can potentially enhance their returns and achieve their financial goals faster.

Performance and Returns

VXUS has consistently outperformed its benchmark, the FTSE Global All Cap ex US Index, over the past five and ten years. As of December 31, 2022, VXUS had delivered an annualized return of 7.97% over the past five years and 9.53% over the past ten years.

Fees and Expenses

VXUS has a low expense ratio of 0.09%, which means that for every $10,000 invested, investors pay only $9 per year in fees. This low cost structure makes VXUS an attractive option for long-term investors.

How to Invest in VXUS

Investors can purchase VXUS through Vanguard or through their preferred brokerage account. You can invest in VXUS through lump sum contributions, regular investments, or both.

Tips and Tricks

Here are a few tips and tricks to help you get the most out of your investment in VXUS:

• Invest for the Long Term: International stocks are typically more volatile than US stocks. Be prepared to hold VXUS for the long term to ride out market fluctuations and maximize your potential returns.
• Rebalance Regularly: Rebalance your portfolio periodically to ensure that your asset allocation remains aligned with your risk tolerance and investment goals.
• Consider Value Investing: Value investing has been shown to be a successful strategy in international markets. Look for undervalued companies in emerging markets and other parts of the world to enhance your potential returns.

Alternatives to VXUS

There are several alternatives to VXUS for investors who want to invest internationally. Here are a few examples:

• iShares MSCI EAFE Index Fund (EFA)
• Schwab International Stock Index Fund (SCHF)
• iShares Core MSCI Total International Stock ETF (IXUS)

Conclusion

The Vanguard Total International Stock Fund (VXUS) is an excellent option for investors who want to diversify their portfolios globally. With its low cost, high diversification, and strong performance, VXUS is a smart investment for both short-term and long-term investors. Whether you're just starting out or looking to enhance your existing portfolio, VXUS is worth considering as a core holding.

Tables

Table 1: Historical Returns of VXUS

Table 2: Top 10 Countries by Weight in VXUS

Table 3: Sector Weightings in VXUS

Table 4: Top 10 Holdings in VXUS