VYMI or VXUS: Which International ETF Is Better for Investors?
Buying international stocks is top of mind for many investors, as the rest of the world’s stocks have often outperformed the S&P 500 index for the past year. But what’s the best way to buy international stocks?
Two low-cost Vanguard international stock ETFs offer slightly different approaches to owning a diversified portfolio beyond America. The Vanguard Total International Stock ETF (VXUS 1.99%) has gained about 25% in the past year, outperforming the S&P 500. And the Vanguard International High Dividend Yield ETF (VYMI 1.70%) has done even better, gaining about 28% in the past year and outperforming the S&P 500 and the tech-heavy Nasdaq-100 index.
Image source: Getty Images.
Let’s take a closer look at these international stock ETFs and see which one might be a better buy.
VXUS: 8,691 international stocks
The Vanguard Total International Stock ETF offers broad exposure to thousands of non-U.S. equities. The fund holds 8,691 stocks. Top holdings include prominent semiconductor companies like Taiwan Semiconductor Manufacturing (3.2% of the fund) and ASML Holding (1.3%). It also gives you exposure to global tech and electronics companies like Samsung Electronics (1.2%), Tencent Holdings (1.1%), and Alibaba Group Holding (0.9%).
Vanguard Total International Stock ETF
Today’s Change
(-1.99%) $-1.57
Current Price
$77.47
Key Data Points
Day’s Range
$77.20 – $78.25
52wk Range
$54.98 – $84.28
Volume
7.7M
This ETF is well-diversified across developed markets in Europe (37.9% of the fund), the Pacific (26.4%), and North America (7.8%), while also giving you exposure to emerging markets (26.6% of the fund). About 15.1% of the fund is invested in Japanese stocks, 9% in the United Kingdom, 8.5% in China, and 7.8% in Canadian companies. The VXUS has an expense ratio of 0.05%. This fund is one of the simplest ways to just “buy the rest of the world” outside of U.S. stocks.
VYMI: 1,535 global stocks with high dividends
The Vanguard International High Dividend Yield ETF holds 1,535 stocks, which is a smaller number of holdings than VXUS. But the VYMI focuses on companies that are expected to deliver higher-than-average dividend yields. This high-yield ETF has delivered average annual returns of 11.8% for the past 10 years, outperforming the VXUS, which has delivered 10.6% average annual returns in the past 10 years.
Compared to the VXUS, the VYMI has slightly less exposure to emerging markets (21.1% of the VYMI) and more exposure to Europe (43.6% of the fund). Both funds have the same percentage of exposure to Pacific stocks (26.4%). The top countries represented in the VYMI are Japan (14.2% of the fund), the United Kingdom (11.4%), Canada (7.9%), Switzerland (7.3%) and Australia (6.7%).
Vanguard International High Dividend Yield ETF
Today’s Change
(-1.70%) $-1.62
Current Price
$93.90
Key Data Points
Day’s Range
$93.58 – $94.59
52wk Range
$65.08 – $101.71
Volume
1.1M
Perhaps the biggest high-level difference between VXUS versus VYMI is that the VYMI fund gives you less exposure to major tech names in China, South Korea and Taiwan, and more exposure to European stocks. The top five holdings in the VYMI are Roche Holding AG (a Swiss healthcare stock) with 1.79% of the fund, British bank HSBC Holdings (1.7%), Switzerland-based pharmaceutical company Novartis AG (1.6%), Swiss food conglomerate Nestlé (1.4%), and Japanese automaker Toyota Motor (1.4%).
The VYMI charges an expense ratio of 0.07%, which is slightly higher than the VXUS but still quite low compared to many stock ETFs.
VYMI or VXUS: head-to-head comparison
If you’re trying to decide which international stock ETF to buy, here’s a quick breakdown of key metrics and performance indicators.
| Metric | Vanguard Total International Stock ETF (VXUS) | Vanguard International High Dividend Yield ETF (VYMI) |
|---|---|---|
| Number of stocks | 8,691 | 1,535 |
| Top five regions | Europe (37.9% of fund), Emerging Markets (26.6%), Pacific (26.4%), North America (7.8%), Middle East (0.8%) | Europe (43.6% of fund), Pacific (26.4%), Emerging Markets (21.1%), North America (7.9%), Middle East (0.8%) |
| Top five markets | Japan (15.1% of fund), United Kingdom (9%), China (8.5%), Canada (7.8%), Taiwan (6.4%) | Japan (14.2% of fund), United Kingdom (11.4%), Canada (7.9%), Switzerland (7.3%), Australia (6.7%) |
| Price to earnings (P/E) ratio | 17.5 | 13.9 |
| Average annual returns |
1 year: 39.6% 3 year: 19.8% 5 year: 9.8% 10 year: 10.6% |
1 year: 45.5% 3 year: 23% 5 year: 14.9% 10 year: 11.8% |
| Expense ratio | 0.05% | 0.07% |
Data source: Vanguard.
Which international ETF should you buy? Both funds are broadly diversified and let you own thousands of international stocks at a low expense ratio. But the Vanguard International High Dividend Yield ETF has outperformed the VXUS for the past 10 years, and it might be undervalued. The VYMI has a price to earnings ratio of only 13.9, which is cheaper than the VXUS P/E ratio of 17.5.
The VYMI lets you own a smaller number of companies with less exposure to emerging markets and more of an emphasis on value stocks and established, dividend-paying companies. Growth stocks and emerging markets tend to be volatile and might underperform the rest of the market, especially if oil price shocks from the Iran war continue for longer. Past performance is no guarantee of future results, but the VYMI high-dividend approach might pay off during uncertain times for the global economy.
If you want an easy, low-cost way to buy “the rest of the world” beyond American stocks, the VXUS is a solid choice. But if you don’t mind focusing on fewer companies with an emphasis on value and dividends, the VYMI could be a better buy than the VXUS for long-term international stock investors.
