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VXUS vs. VGK: What’s The Difference?

The Vanguard Total International Stock Index Fund ETF Shares (VXUS) and the Vanguard FTSE Europe Index Fund ETF Shares (VGK) are both among the Top 100 ETFs. VXUS is a Vanguard Foreign Large Blend fund and VGK is a Vanguard Europe Stock fund. So, what’s the difference between VXUS and VGK? And which fund is better?

VXUS and VGK have the same expense ratio: 0.08%. VXUS also has a higher exposure to the financial services sector and a lower standard deviation. Overall, VXUS has provided higher returns than VGK over the past ten years.

In this article, we’ll compare VXUS vs. VGK. We’ll look at annual returns and portfolio growth, as well as at their performance and fund composition. Moreover, I’ll also discuss VXUS’s and VGK’s industry exposure, risk metrics, and holdings and examine how these affect their overall returns.

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Summary

VXUSVGK
NameVanguard Total International Stock Index Fund ETF SharesVanguard FTSE Europe Index Fund ETF Shares
CategoryForeign Large BlendEurope Stock
IssuerVanguardVanguard
AUM404.73B25.7B
Avg. Return8.41%6.68%
Div. Yield2.44%2.52%
Expense Ratio0.08%0.08%

The Vanguard Total International Stock Index Fund ETF Shares (VXUS) is a Foreign Large Blend fund that is issued by Vanguard. It currently has 404.73B total assets under management and has yielded an average annual return of 8.41% over the past 10 years. The fund has a dividend yield of 2.44% with an expense ratio of 0.08%.

The Vanguard FTSE Europe Index Fund ETF Shares (VGK) is a Europe Stock fund that is issued by Vanguard. It currently has 25.7B total assets under management and has yielded an average annual return of 6.68% over the past 10 years. The fund has a dividend yield of 2.52% with an expense ratio of 0.08%.

VXUS’s dividend yield is 0.08% lower than that of VGK (2.44% vs. 2.52%). Also, VXUS yielded on average 1.73% more per year over the past decade (8.41% vs. 6.68%). VXUS and VGK have the same expense ratio: 0.08%.

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Fund Composition

Industry Exposure

VXUS vs. VGK - Industry Exposure

VXUSVGK
Technology13.07%8.3%
Industrials12.94%15.58%
Energy4.55%4.3%
Communication Services7.06%5.09%
Utilities2.94%3.89%
Healthcare9.19%13.76%
Consumer Defensive7.83%11.39%
Real Estate3.79%2.57%
Financial Services17.64%15.85%
Consumer Cyclical12.64%11.6%
Basic Materials8.37%7.67%

The Vanguard Total International Stock Index Fund ETF Shares (VXUS) has the most exposure to the Financial Services sector at 17.64%. This is followed by Technology and Industrials at 13.07% and 12.94% respectively. Real Estate (3.79%), Energy (4.55%), and Communication Services (7.06%) only make up 15.40% of the fund’s total assets.

VXUS’s mid-section with moderate exposure is comprised of Consumer Defensive, Basic Materials, Healthcare, Consumer Cyclical, and Industrials stocks at 7.83%, 8.37%, 9.19%, 12.64%, and 12.94%.

The Vanguard FTSE Europe Index Fund ETF Shares (VGK) has the most exposure to the Financial Services sector at 15.85%. This is followed by Industrials and Healthcare at 15.58% and 13.76% respectively. Utilities (3.89%), Energy (4.3%), and Communication Services (5.09%) only make up 13.28% of the fund’s total assets.

VGK’s mid-section with moderate exposure is comprised of Basic Materials, Technology, Consumer Defensive, Consumer Cyclical, and Healthcare stocks at 7.67%, 8.3%, 11.39%, 11.6%, and 13.76%.

VXUS is 1.79% more exposed to the Financial Services sector than VGK (17.64% vs 15.85%). VXUS’s exposure to Technology and Industrials stocks is 4.77% higher and 2.64% lower respectively (13.07% vs. 8.3% and 12.94% vs. 15.58%). In total, Real Estate, Energy, and Communication Services also make up 3.44% more of the fund’s holdings compared to VGK (15.40% vs. 11.96%).

Holdings

VXUS - Holdings

VXUS HoldingsWeight
Taiwan Semiconductor Manufacturing Co Ltd1.62%
Tencent Holdings Ltd1.41%
Alibaba Group Holding Ltd Ordinary Shares1.26%
Nestle SA1.1%
Samsung Electronics Co Ltd1.05%
ASML Holding NV0.86%
Roche Holding AG0.81%
Toyota Motor Corp0.67%
LVMH Moet Hennessy Louis Vuitton SE0.61%
Novartis AG0.6%

VXUS’s Top Holdings are Taiwan Semiconductor Manufacturing Co Ltd, Tencent Holdings Ltd, Alibaba Group Holding Ltd Ordinary Shares, Nestle SA, and Samsung Electronics Co Ltd at 1.62%, 1.41%, 1.26%, 1.1%, and 1.05%.

ASML Holding NV (0.86%), Roche Holding AG (0.81%), and Toyota Motor Corp (0.67%) have a slightly smaller but still significant weight. LVMH Moet Hennessy Louis Vuitton SE and Novartis AG are also represented in the VXUS’s holdings at 0.61% and 0.6%.

VGK - Holdings

VGK HoldingsWeight
Nestle SA2.82%
ASML Holding NV2.2%
Roche Holding AG2.13%
LVMH Moet Hennessy Louis Vuitton SE1.58%
Novartis AG1.55%
AstraZeneca PLC1.27%
SAP SE1.25%
Unilever PLC1.23%
Novo Nordisk A/S B1.09%
Siemens AG0.96%

VGK’s Top Holdings are Nestle SA, ASML Holding NV, Roche Holding AG, LVMH Moet Hennessy Louis Vuitton SE, and Novartis AG at 2.82%, 2.2%, 2.13%, 1.58%, and 1.55%.

AstraZeneca PLC (1.27%), SAP SE (1.25%), and Unilever PLC (1.23%) have a slightly smaller but still significant weight. Novo Nordisk A/S B and Siemens AG are also represented in the VGK’s holdings at 1.09% and 0.96%.

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Risk Analysis

VXUSVGK
Mean Return0.560.61
R-squared98.3992.76
Std. Deviation15.1216.65
Alpha0.310.45
Beta0.991.06
Sharpe Ratio0.40.4
Treynor Ratio5.145.12

The Vanguard Total International Stock Index Fund ETF Shares (VXUS) has a Standard Deviation of 15.12 with a Beta of 0.99 and a Alpha of 0.31. Its Mean Return is 0.56 while VXUS’s Treynor Ratio is 5.14. Furthermore, the fund has a Sharpe Ratio of 0.4 and a R-squared of 98.39.

The Vanguard FTSE Europe Index Fund ETF Shares (VGK) has a Sharpe Ratio of 0.4 with a Beta of 1.06 and a Mean Return of 0.61. Its Alpha is 0.45 while VGK’s Treynor Ratio is 5.12. Furthermore, the fund has a R-squared of 92.76 and a Standard Deviation of 16.65.

VXUS’s Mean Return is 0.05 points lower than that of VGK and its R-squared is 5.63 points higher. With a Standard Deviation of 15.12, VXUS is slightly less volatile than VGK. The Alpha and Beta of VXUS are 0.14 points lower and 0.07 points lower than VGK’s Alpha and Beta.

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Performance

Annual Returns

VXUS vs. VGK - Annual Returns

YearVXUSVGK
202011.32%6.5%
201921.58%24.26%
2018-14.42%-14.79%
201727.52%27.06%
20164.72%-0.59%
2015-4.28%-1.87%
2014-4.17%-6.56%
201315.16%24.93%
201218.22%21.01%
20110.0%-11.49%
20100.0%5.01%

VXUS had its best year in 2017 with an annual return of 27.52%. VXUS’s worst year over the past decade yielded -14.42% and occurred in 2018. In most years the Vanguard Total International Stock Index Fund ETF Shares provided moderate returns such as in 2010, 2016, and 2020 where annual returns amounted to 0.0%, 4.72%, and 11.32% respectively.

The year 2017 was the strongest year for VGK, returning 27.06% on an annual basis. The poorest year for VGK in the last ten years was 2018, with a yield of -14.79%. Most years the Vanguard FTSE Europe Index Fund ETF Shares has given investors modest returns, such as in 2016, 2010, and 2020, when gains were -0.59%, 5.01%, and 6.5% respectively.

Portfolio Growth

VXUS vs. VGK - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VXUS$10,000$19,3158.41%
VGK$10,000$19,7436.68%

A $10,000 investment in VXUS would have resulted in a final balance of $19,315. This is a profit of $9,315 over 9 years and amounts to a compound annual growth rate (CAGR) of 8.41%.

With a $10,000 investment in VGK, the end total would have been $19,743. This equates to a $9,743 profit over 9 years and a compound annual growth rate (CAGR) of 6.68%.

VXUS’s CAGR is 1.73 percentage points higher than that of VGK and as a result, would have yielded $428 less on a $10,000 investment. Thus, VXUS outperformed VGK by 1.73% annually.


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