VTI + VXUS is the most commonly recommended two-fund global stock portfolio among DIY investors. Together, these two Vanguard ETFs cover virtually the entire global stock market — every publicly traded company in the US (VTI) and every major market outside the US (VXUS).
- VTI — Vanguard Total Stock Market ETF — 3,600+ US stocks — 0.03% expense ratio
- VXUS — Vanguard Total International Stock ETF — 7,000+ non-US stocks — 0.07% expense ratio
Quick Comparison: VTI vs. VXUS
| Feature | VTI | VXUS |
|---|---|---|
| Expense ratio | 0.03% | 0.07% |
| Holdings | ~3,600+ | ~7,000+ |
| Coverage | Entire US stock market | Entire non-US stock market |
| Countries | USA | 40+ countries |
| Dividend yield | ~1.3%–1.7% | ~2.8%–3.5% |
| 10-year performance | ~12–14%/yr | ~5–7%/yr |
| Volatility | Moderate | Moderate-high |
| Inception date | 2001 | 2011 |
What Is VXUS?
VXUS (Vanguard Total International Stock ETF) tracks the FTSE Global All Cap ex US Index. This includes:
- Developed markets (roughly 80% of VXUS): UK, Japan, France, Germany, Canada, Australia, Switzerland, and others
- Emerging markets (roughly 20% of VXUS): China, India, Brazil, Taiwan, South Korea, and others
VXUS holds 7,000+ stocks — far more diversification than VTI’s 3,600, simply because there are more countries. However, many of these holdings are tiny positions.
VXUS top country weights (approximate 2026):
- Japan: ~15–17%
- UK: ~9–11%
- China: ~8–12%
- France: ~7–9%
- Canada: ~6–8%
- India: ~5–7%
- Germany: ~5–7%
The Case for Holding VTI and VXUS Together
Why Diversify Internationally?
The primary argument for adding VXUS to a VTI portfolio:
- Valuation diversification: Non-US stocks often trade at lower P/E ratios than US stocks, potentially offering value
- Currency diversification: VXUS returns are partly denominated in non-USD currencies
- Sector diversification: International markets have higher weight in financials, energy, and materials; lower in tech
- Reduced home-country bias: 100% US investing ignores ~40% of global market cap
Why US-Only (VTI) Investors Disagree
Critics of international diversification argue:
- US companies already derive significant revenue internationally (S&P 500 companies earn ~40% of revenue outside the US)
- VXUS has substantially underperformed VTI over 2010–2025
- Additional currency and political risk from VXUS
- The simplicity of a single-fund portfolio
Historical context: The US outperformed international from 2010–2025. But from 1970–2000, international stocks outperformed the US in several decades. The future is uncertain.
What Allocation Between VTI and VXUS?
Global market-cap weight (the “neutral” position): The US represents approximately 60% of global market capitalisation (as of 2026). A market-weight portfolio: 60% VTI / 40% VXUS.
Common real-world allocations:
| VTI % | VXUS % | Rationale |
|---|---|---|
| 80% | 20% | US-focused with international hedge |
| 70% | 30% | Moderate international diversification |
| 60% | 40% | Approximate global market weight |
| 50% | 50% | Equal weight (strong international conviction) |
The Vanguard Target Retirement funds use roughly 40% international weighting in their equity allocation — a reasonable benchmark for moderate international exposure.
Performance: VTI vs. VXUS
The past decade strongly favoured US stocks:
| Period | VTI return | VXUS return |
|---|---|---|
| 5-year (2021–2025) | ~14–16%/yr | ~6–8%/yr |
| 10-year (2016–2025) | ~12–14%/yr | ~5–7%/yr |
| Since VXUS inception (2011–2025) | ~13–15%/yr | ~5–8%/yr |
VXUS has significantly underperformed VTI over 2011–2025. However, this is not evidence that VXUS will continue to underperform — it may reflect starting valuations and currency effects rather than a permanent structural advantage for US stocks.
Worked Example: Two-Fund Portfolio (70/30 VTI/VXUS)
$500/month invested over 20 years:
- 70% VTI + 30% VXUS blended return (approximate): ~10–12%/yr
- 100% VTI (approximate): ~12–14%/yr
- 100% VXUS (approximate): ~5–7%/yr
The blended portfolio smooths returns between US and international markets. Whether this is better or worse depends on future performance — which neither fund can predict.
VWRL and VT: All-in-One Alternatives
For investors who want one fund covering global equities:
- VT (Vanguard Total World Stock ETF) — holds VTI + VXUS in one fund at 0.07% — the simplest global equity fund
- VWRL — Vanguard FTSE All-World (not US-listed; available in UK/EU)
VT automatically rebalances between US and international at market-cap weight. It costs 0.07% vs. the VTI+VXUS blended cost of approximately 0.04–0.05%. The simplicity of one fund vs. slightly higher cost is the trade-off.
The Three-Fund Portfolio: Adding Bonds
Many investors add a bond fund to the VTI + VXUS base:
- VTI (60%) — US equities
- VXUS (25%) — International equities
- BND (15%) — US Bond Market (0.03%)
This three-fund portfolio is a complete, globally diversified, low-cost investment portfolio. The bond allocation provides stability and reduces overall portfolio volatility.
Internal Links
- VTI ETF 2026 Review
- VOO vs. VTI: S&P 500 vs. total market
- Best Vanguard funds for retirement
- Vanguard Digital Advisor review
- Vanguard custodial account guide
- Vanguard investing hub
Bottom Line
VTI and VXUS together provide the broadest possible equity diversification at low cost — the entire US and non-US global equity market for a blended 0.04–0.05% expense ratio. The right allocation depends on your views on US vs. international performance and your comfort with currency/geopolitical risk. Most financial educators recommend some international exposure; the debate is how much. A 70/30 or 60/40 VTI/VXUS split is a reasonable starting point for a globally diversified investor.
This article is for educational purposes only and does not constitute personalised investment advice. All investments carry risk, including the possible loss of principal.
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