VXUS vs VGK: Popular International ETFs

If you’re considering investing in international stocks, you may have come across two popular exchange-traded funds (ETFs): VXUS vs VGK.

VXUS vs VGK are both Vanguard funds that provide exposure to international equities.

However, there are differences between the two funds that investors should be aware of before making an investment decision.

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VXUS is an ETF that tracks the FTSE Global All Cap ex US Index. This index includes large, mid, and small-cap stocks from developed and emerging markets outside of the United States. On the other hand, VGK tracks the FTSE Developed Europe All Cap Index, which includes large, mid, and small-cap stocks from developed European countries. While VXUS provides exposure to a broader range of international markets, VGK focuses solely on European markets.

Key Takeaways VXUS vs VGK

  • VXUS and VGK are both Vanguard ETFs that provide exposure to international equities.
  • VXUS tracks the FTSE Global All Cap ex US Index, while VGK tracks the FTSE Developed Europe All Cap Index.
  • VXUS provides exposure to a broader range of international markets, while VGK focuses solely on European markets.

Overview of VXUS vs VGK

When it comes to investing in international stock markets, the Vanguard Total International Stock ETF (VXUS) and the Vanguard FTSE Europe ETF (VGK) are two popular options that investors often consider. Both of these ETFs are managed by Vanguard, a well-known investment management company.

Vanguard Total International Stock ETF (VXUS)

VXUS is an ETF that provides investors with exposure to a wide range of international stocks. The fund tracks the FTSE Global All Cap ex US Index, which includes stocks from developed and emerging markets outside of the United States. This ETF has a low expense ratio of 0.07%, making it an attractive option for cost-conscious investors.

VXUS is a diversified fund that invests in a variety of sectors, including consumer goods, financials, healthcare, and technology. The fund’s top holdings include companies such as Tencent Holdings, Nestle, and Samsung Electronics. VXUS is a great option for investors looking for broad exposure to international markets.

Vanguard FTSE Europe ETF (VGK)

VGK is an ETF that tracks the FTSE Developed Europe All Cap Index, which includes stocks from developed markets in Europe. The fund has a low expense ratio of 0.08%, making it an attractive option for cost-conscious investors.

VGK provides investors with exposure to a variety of sectors, including consumer goods, financials, healthcare, and industrials. The fund’s top holdings include companies such as Nestle, Novartis, and Roche Holding. VGK is a great option for investors looking for exposure to European markets.

In summary, both VXUS and VGK are great options for investors looking to diversify their portfolio with international stocks. VXUS provides exposure to a wider range of international markets, while VGK focuses specifically on European markets. Both ETFs have low expense ratios and invest in a variety of sectors, making them attractive options for investors looking for broad exposure to international markets.

Fund Composition and Holdings VXUS vs VGK

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When comparing VXUS and VGK, it is important to understand their fund composition and holdings. This section will cover the equity distributions, top holdings and sectors, and regional allocation for both funds.

Equity Distributions

VXUS is a total international stock fund that includes both developed and emerging markets. On the other hand, VGK is a Europe-focused fund that only includes developed markets. VXUS has a wider equity distribution than VGK, which means it includes more stocks from different regions. This can provide more diversification for your portfolio.

Top Holdings and Sectors

VXUS and VGK have different top holdings and sectors. The top five holdings for VXUS are Tencent Holdings, Alibaba Group Holding, Nestle, Samsung Electronics, and Taiwan Semiconductor Manufacturing. Meanwhile, the top five holdings for VGK are Nestle, Novartis, Roche Holding, HSBC Holdings, and Novo Nordisk.

In terms of sectors, VXUS has a higher allocation in technology, consumer cyclical, and healthcare sectors. VGK, on the other hand, has a higher allocation in financials, healthcare, and consumer defensive sectors. It is important to note that the sector allocation can change over time.

Regional Allocation

VXUS has a broader regional allocation than VGK. VXUS includes companies from developed and emerging markets in Europe, Asia, and the Pacific region. Meanwhile, VGK only includes companies from developed markets in Europe. VXUS has a higher allocation in Japan, the United Kingdom, France, Switzerland, and Germany, while VGK has a higher allocation in the United Kingdom.

Overall, VXUS and VGK have different fund compositions and holdings. VXUS has a broader equity distribution, different top holdings and sectors, and a wider regional allocation. VGK, on the other hand, is more focused on developed markets in Europe. When choosing between these two funds, it is important to consider your investment goals and risk tolerance.

Performance and Returns

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Historical Performance

When comparing VXUS and VGK, historical performance is an essential factor to consider. According to a PortfoliosLab analysis, over the past ten years, VGK has outperformed VXUS with an annualized return of 4.09%, while VXUS has yielded a comparatively lower 3.70% annualized return. However, it is important to note that past performance does not guarantee future results.

YTD Return

Year-to-date (YTD) return is another crucial factor to consider when evaluating VXUS and VGK. As of the current date of December 9, 2023, VXUS has a YTD return of 10.23%, while VGK has a YTD return of 9.82%. While VXUS has a slightly higher YTD return, it is important to consider other factors such as expense ratios and diversification.

Dividend Yield

Dividend yield is an important factor to consider when evaluating VXUS and VGK. According to AskFinny, VGK has a higher dividend yield of 2.12% compared to VXUS’s dividend yield of 1.97%. However, it is important to note that dividend yield can vary over time and is not guaranteed.

In summary, when evaluating VXUS and VGK, historical performance, YTD return, and dividend yield are important factors to consider. While VGK has outperformed VXUS in historical performance, VXUS has a slightly higher YTD return. Additionally, VGK has a higher dividend yield compared to VXUS. It is important to consider other factors such as expense ratios and diversification when making investment decisions.

Costs and Investment Ratios

When it comes to investing in ETFs, costs and investment ratios are crucial factors to consider. In this section, we will compare the costs and investment ratios of VXUS and VGK to help you make an informed decision.

Expense Ratios

The expense ratio is the annual fee charged by the fund manager to cover operating expenses. VGK has an expense ratio of 0.08%, which is slightly higher than VXUS’s expense ratio of 0.07%. However, both funds have low expense ratios compared to the industry average of 0.44%. Therefore, you can expect to pay a relatively low fee for investing in either of these ETFs.

Trading Volume and Liquidity

Another important factor to consider when investing in ETFs is trading volume and liquidity. VXUS has an average daily volume of 1.9 million shares, while VGK has an average daily volume of 2.7 million shares. This indicates that VGK is more liquid than VXUS, which means that it is easier to buy and sell shares of VGK without affecting the market price.

In terms of trading volume, both ETFs have relatively high trading volumes, which means that they are actively traded and have tight bid-ask spreads. This makes it easier for investors to buy and sell shares of these ETFs without incurring significant transaction costs.

In conclusion, when comparing the costs and investment ratios of VXUS and VGK, both ETFs have low expense ratios and high trading volumes, making them attractive investment options for investors looking to invest in international stocks. However, VGK has a slightly higher expense ratio and is more liquid than VXUS, which may make it a better option for some investors.

Investment Considerations

When deciding between VXUS and VGK, there are several investment considerations you should keep in mind. Here are some key factors to consider:

Market Capitalization

One of the main differences between VXUS and VGK is the market capitalization of the companies they hold. VXUS holds a more diverse range of companies, including small and mid-cap companies, while VGK focuses solely on large-cap European companies. This means that VXUS may offer more exposure to global markets, while VGK may provide more concentrated exposure to large-cap European companies.

Investment Strategy and Indexing

VXUS and VGK also differ in their investment strategies and indexing. VXUS tracks the FTSE Global All Cap ex US Index, which includes companies from both developed and emerging markets outside of the US. VGK, on the other hand, tracks the FTSE Developed Europe All Cap Index, which includes companies from 16 European countries.

Risk and Volatility

When it comes to risk and volatility, both VXUS and VGK are subject to market fluctuations. However, because VXUS holds a more diverse range of companies, it may offer slightly less volatility than VGK. It’s important to keep in mind that investing in any stock or ETF carries risk, and it’s always a good idea to diversify your investments to mitigate risk.

Overall, when deciding between VXUS and VGK, it’s important to consider your investment goals, risk tolerance, and portfolio diversification. VXUS may be a better option if you’re looking for exposure to global markets and a more diverse range of companies, while VGK may be a good choice if you’re looking for concentrated exposure to large-cap European companies.

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