Overlooked Vanguard ETF outperforms rivals with international exposure

What happened: Vanguard's VXUS ETF, with broad international exposure, has outperformed rivals like iShares' EEM. VXUS offers a lower expense ratio (0.05% vs. EEM's 0.68%) and higher dividend yield (2.5% vs. EEM's 1.2%). While EEM delivered a stronger 1-year return (30.1% vs. VXUS's 20.3%), VXUS experienced a shallower 5-year drawdown (-14.2% vs. EEM's -18.8%). VXUS's broader diversification across developed and emerging economies has contributed to its performance.

Market impact: This narrative impacts investors seeking international exposure. VXUS's lower costs and broader diversification make it an attractive option for those looking to gain exposure to global markets. The ETF's outperformance suggests that a balanced approach to international investing, rather than heavy tilts towards specific sectors or regions, can be beneficial.

What to watch next: Investors should monitor the upcoming earnings reports from Vanguard and iShares' parent companies, Vanguard Group and BlackRock, respectively, scheduled for late April. Additionally, keep an eye on global economic indicators, such as GDP growth and inflation rates, which will provide insights into the performance of international markets and the potential for continued outperformance of VXUS. Lastly, watch for any changes in the ETFs' expense ratios or portfolio compositions, which could impact their future performance.