International finally got a turn. In 2026, VXUS has climbed roughly 10% year to date, while VOO is up around 8%, marking the first notable YTD lead for VXUS over the S&P 500 since 2021. A 24/7 Wall St. infographic spotlighted how VXUS is built, where it fits, and the tradeoffs behind that early edge.
The fund follows the FTSE Global All Cap ex US Index, providing immediate exposure to firms beyond the United States across both developed and emerging economies. VXUS charges a 0.05% annual expense, manages roughly $137 billion, and its payout yield sits near 2.6%.
Foreign returns do not land in your account in euros or yen, they show up in dollars. A firmer dollar trims the value of overseas earnings once translated back, separate from how those foreign businesses are actually performing. Domestically, the U.S. trade deficit was $60.3 billion in March 2026 after it had expanded to $72.9 billion in December, reflecting a comparable macro setting.
Developed markets are doing more of the heavy lifting. In Vanguard's lineup, the Vanguard FTSE Developed Markets ETF (NYSEARCA:VEA) has risen nearly 11% year to date, and the Vanguard FTSE Emerging Markets ETF (NYSEARCA:VWO) has advanced about 8%. Tailwinds include ongoing corporate reforms in Japan and a pickup in European industrial activity.
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A hot start does not erase the long view. Across the last five years, VXUS has delivered about 51.3%, compared with roughly 85.4% for an S&P 500 stand-in. Stretch it to a decade, and VXUS is near 145% cumulative compared with 313.8% for VOO. VXUS has done exactly what it promised by delivering broad non-U.S. exposure, but the opportunity cost versus a plain U.S. large cap tracker has been steep.
Sector mix matters, too. International indexes often skew toward financials, industrials, and materials and carry less of the concentrated tech exposure that powered the S&P 500 from 2016 through 2024. Taxes also bite: foreign dividend withholding reduces take-home yield. In taxable accounts, some of that can be reclaimed via a tax credit, but not in IRAs.
VXUS wraps developed and emerging markets in one ticker, a fit for anyone who does not want to toggle between the two. If you prefer only developed markets, VEA offers that slice at a similar fee. Currency risk cuts both ways: periods of a softer dollar can boost foreign equity returns, and when the Federal Reserve leans more hawkish and the dollar strengthens, gains can get shaved before they reach a U.S. account.
For those concentrated in U.S. equities, allocating roughly 20% to 30% of the stock portion to VXUS moves the portfolio nearer to global market-cap weights without wagering on the next regional winner. Short-term outperformance does not settle the long debate, and there is no basis here to call a lasting rotation. Even so, VXUS remains a low-cost way to keep international diversification in the mix, while VOO continues to be the simpler one-fund route to traditional U.S.-style compounding.
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