As someone who is interested in investing, I’ve been looking into the differences between VXUS and VTIAX. Both funds are offered by Vanguard and are designed to provide exposure to international stocks. There are some key differences between the two that are important to consider before making an investment decision.VXUS vs VTIAX:

First off, it’s important to note that VXUS is an exchange-traded fund (ETF) while VTIAX is a mutual fund. This means that there are some differences in how they are structured and traded. Additionally, VTIAX has a slightly higher expense ratio at 0.11% compared to VXUS’s 0.08%.

When it comes to performance, there are some slight differences between the two funds.

According to my research, VXUS has slightly lower returns with a compound annual growth rate (CAGR) of 4.15% compared to VTIAX’s 4.28%. It’s important to keep in mind that past performance is not necessarily indicative of future results.

What is VXUS and VTIAX?

VXUS

As I researched VXUS, I found out that it is an exchange-traded fund (ETF) offered by Vanguard. The fund aims to track the performance of the MSCI All Country World ex USA Investable Market Index.

This index includes stocks from developed and emerging markets, excluding the United States. VXUS has no minimum investment requirement, which makes it a great choice for new investors.

VTIAX

VTIAX is a mutual fund offered by Vanguard. The fund aims to track the performance of the FTSE Global All Cap ex US Index.

This index includes stocks from developed and emerging markets, excluding the United States.

VTIAX has a minimum investment requirement of $3,000, which may be a barrier to entry for some investors.

Both funds provide exposure to international markets, but they differ in structure and expense ratio. VXUS has a lower expense ratio at 0.08%, compared to VTIAX’s 0.11%.

VTIAX has slightly higher returns with a compound annual growth rate (CAGR) of 4.28%, compared to VXUS’s 4.15%.

As a retail investor, the difference in structure and expense ratio may have implications for your investment strategy. It’s important to consider your investment goals and risk tolerance before deciding which fund to invest in.

Investment Objectives VXUS vs VTIAX

VXUS Investment Objectives

As an exchange-traded fund, VXUS aims to provide investors with broad exposure to global stock markets.

Specifically, the fund invests in both developed and emerging markets outside of the United States.

This includes companies in Europe, Asia, Canada, Australia, and other regions. VXUS seeks to track the performance of the FTSE Global All Cap ex US Index, which is a market-capitalization-weighted index of over 7,000 stocks in 46 countries.

VTIAX Investment Objectives

On the other hand, VTIAX is a mutual fund that also invests in international stocks. However, its focus is on companies in developed markets outside of the United States.

This includes stocks in Europe, the Pacific, and Canada. VTIAX seeks to track the performance of the FTSE Global All Cap ex US Index, which is the same index that VXUS follows.

Despite their slightly different investment objectives, both VXUS and VTIAX provide investors with exposure to international stocks. This can help to diversify your portfolio and potentially reduce risk.

It’s important to note that there are some differences between the two funds that may impact your investment decisions.

For example, VXUS has a lower expense ratio than VTIAX, which may make it a more attractive option for some investors.

Additionally, the fact that VXUS is an ETF means that it can be traded like a stock, which may be more convenient for some investors.

The decision between VXUS and VTIAX will depend on your individual investment goals and preferences.

Geographic Diversification VXUS vs VTIAX

When investing in international stocks, it’s important to consider the geographic diversification of the fund. Both VXUS and VTIAX offer exposure to international markets, but they differ slightly in their approach.

VXUS Geographic Diversification

VXUS aims to track the performance of 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.

As of March 31, 2023, the top three countries represented in the index were Japan, China, and the United Kingdom, with a combined weight of over 40%.

The index is market-cap weighted, which means that the countries with the largest market capitalizations have the highest weightings in the index.

This can lead to a concentration of holdings in certain countries, which may or may not align with an investor’s preferences.

VTIAX Geographic Diversification

VTIAX, on the other hand, tracks the performance of the FTSE Global All Cap ex US Index, which includes large-, mid-, and small-cap stocks from developed and emerging markets outside of the United States.

As of March 31, 2023, the top three countries represented in the index were Japan, the United Kingdom, and China, with a combined weight of over 40%.

Like VXUS, the index is market-cap weighted, which can lead to concentration in certain countries. However, VTIAX also includes exposure to Canada, which is not included in the FTSE Global All Cap ex US Index tracked by VXUS.

Overall, both VXUS and VTIAX offer diversified exposure to international markets. However, VXUS has a slightly higher concentration in Japan and China, while VTIAX includes exposure to Canada.

Asset Class and Holdings VXUS vs VTIAX

VXUS Asset Class and Holdings

When it comes to asset class and holdings, VXUS offers exposure to a wide range of international stocks.

The fund tracks the FTSE Global All Cap ex US Index, which includes small, mid, and large-cap stocks from developed and emerging markets.

The fund holds over 7,000 stocks, with the majority of its holdings in Japan, the UK, and China.

The top ten holdings of VXUS make up only 6.5% of the fund’s total assets, making it a well-diversified fund.

VTIAX Asset Class and Holdings

VTIAX also offers exposure to a wide range of international stocks. The fund tracks the FTSE Global All Cap ex US Index, which includes small, mid, and large-cap stocks from developed and emerging markets.

The fund holds over 7,000 stocks, with the majority of its holdings in Japan, the UK, and China. The top ten holdings of VTIAX make up only 6.2% of the fund’s total assets, making it a well-diversified fund.

One thing to note about VTIAX is that it has a higher expense ratio compared to VXUS. This means that VTIAX is slightly more expensive to hold.

VTIAX also has a higher minimum investment requirement compared to VXUS. Overall, both VXUS and VTIAX offer excellent exposure to international markets, with similar asset classes and holdings.

The main difference between the two funds is their structure, with VXUS being an ETF and VTIAX being a mutual fund.

Investors should consider their investment goals and preferences when choosing between these two funds.

Expense Ratio and Fees VXUS vs VTIAX

VXUS Expense Ratio and Fees

As an exchange-traded fund (ETF), VXUS has an expense ratio of just 0.08%, which is considered extremely low for any international fund.

Vanguard recently decreased their fee from 0.09% to 0.08%, which is another example of Vanguard working for the investor.

This low expense ratio means that investors can keep more of their returns and pay less in fees over the long term.

VTIAX Expense Ratio and Fees

On the other hand, VTIAX is a mutual fund with a slightly higher expense ratio of 0.11%. While this is still considered low compared to other mutual funds, it is higher than the expense ratio of VXUS.

This means that investors in VTIAX will pay slightly more in fees than those in VXUS.

It’s important to note that fees and expenses can have a significant impact on your portfolio’s returns over the long term.

For example, the difference between a 2% fee and a 0.04% fee over 30 years can result in your portfolio having half the total value!

Therefore, it’s crucial to consider the expense ratios and fees when choosing between these two funds.

While VXUS has a slightly lower expense ratio than VTIAX, it’s important to consider other factors such as the fund’s performance, holdings, and volatility before making a decision.

The choice between VXUS and VTIAX will depend on your individual investment goals and risk tolerance.

Historical Performance VXUS vs VTIAX

VXUS Historical Performance

As an international ETF, VXUS aims to track the performance of the FTSE Global All Cap ex US Index. Since its inception in 2011, VXUS has had an annualized return of 4.15%.

It’s important to note that VXUS has experienced some volatility in its performance over the years, with some years seeing returns as high as 20% and others as low as -15%.

VTIAX Historical Performance

VTIAX, on the other hand, is a mutual fund that seeks to track the performance of the FTSE Global All Cap ex US Index.

Since its inception in 1996, VTIAX has had an annualized return of 7.67%. While VTIAX has had a more consistent performance over the years, it has seen some years with returns as high as 30% and others as low as -20%.

It’s worth noting that both VXUS and VTIAX have seen similar performance in recent years, with VXUS having a slightly lower CAGR at 4.15% compared to VTIAX’s 4.28%.

Past performance is not indicative of future results, and it’s important to consider other factors such as fees and expenses when choosing between these two funds.

In terms of fees, VXUS has a lower expense ratio at 0.08% compared to VTIAX’s 0.11%. This means that for every $1,000 invested, VXUS charges 80 cents in fees while VTIAX charges $1.10.

While this may seem like a small difference, it can add up over time, especially for long-term investors.

As a retail investor, it’s important to consider factors such as fees, performance, and structure when making investment decisions.

Which One Should You Choose? VXUS vs VTIAX

After examining the differences between VXUS and VTIAX, it’s time to decide which one is the better choice for you. Here are some factors to consider:

Factors to Consider

• Investment Strategy: VXUS and VTIAX have different investment strategies. VXUS invests in both developed and emerging markets outside of the United States, while VTIAX focuses solely on developed markets. If you’re looking for broader exposure to international markets, VXUS may be the better choice.
• Expense Ratio: VTIAX has a higher expense ratio at 0.11% compared to VXUS’s 0.08%. While this may seem like a small difference, it can add up over time and impact your overall returns.
• Minimum Investment: VTIAX has a $3,000 minimum investment, while there is no minimum investment requirement for VXUS. If you’re a new investor or don’t have a lot of upfront capital to invest, VXUS may be the better choice.

Investment Strategy VXUS vs VTIAX

If you’re looking for broader exposure to international markets, VXUS may be the better choice due to its investment strategy. However, if you prefer to focus solely on developed markets, VTIAX may be the better choice.

Expense Ratio VXUS vs VTIAX

While VTIAX has a higher expense ratio, it’s important to consider the impact this may have on your overall returns. If you’re looking to minimize expenses and maximize returns, VXUS may be the better choice.

The choice between VXUS and VTIAX will depend on your individual investment goals and preferences. It’s important to do your own research and consult with a financial advisor before making any investment decisions.

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FAQs: VXUS vs VTIAX