ETF Comparison: Vanguard FTSE All-World ex-US ETF (VEU) Versus iShares Core MSCI Total International Stock ETF (IXUS)

VEU vs IXUS: Total cost of ownership

Both VEU and IXUS are designed with low fees in mind, a hallmark of Vanguard's offerings and iShares' "Core" lineup. Each sports an expense ratio of just 0.07%, which translates to $7 per $10,000 invested annually.

Looking at liquidity, implicit costs reflected in the bid-ask spread are also minimal for both ETFs. VEU

shows a 30-day median bid-ask spread of 0.018%, while IXUS is slightly higher at 0.026%.

When you tally up the costs, VEU just edges out IXUS in terms of overall affordability, but the difference is so minor it's hardly a deciding factor unless you're dealing with a significantly large investment. This round, I'd say it's effectively a tie in terms of total cost of ownership.

VEU vs IXUS: Methodology and holdings

Both VEU

and

IXUS

+0.99%

offer broad exposure to international markets excluding the U.S., spanning both developed and emerging markets. However, they differ slightly in their index tracking.

VEU follows the FTSE All-World ex US Index, encompassing around 3,333 equities but is limited to large and mid-cap stocks. In contrast, IXUS tracks the MSCI ACWI ex USA IMI Index, which includes a broader range with 4,323 holdings, capturing more mid and small-cap stocks.

Despite these differences, the market cap-weighted nature of both indexes results in very similar country distributions, sector allocations, and top holdings in terms of both concentration and composition.

The decision between the two might just come down to a preference for the scope of market cap exposure: VEU for those content with large and mid-caps, and IXUS for investors seeking a more comprehensive range including smaller companies.

Moreover, their overall similarity but use of differing benchmarks makes them excellent candidates for tax-loss harvesting against one another.

VEU vs IXUS: Risk and return

As anticipated from their similar portfolio compositions, the performance of VEU and IXUS over the last several years has been nearly identical, although VEU has seen net outflows year to date, while IXUS has attracted more investment.

From October 2012 to the present, VEU has slightly outperformed IXUS in terms of total return but experienced slightly higher volatility. However, the difference in risk-adjusted returns between the two is statistically insignificant.

Risk-wise, both ETFs share roughly the same holdings and country weightings, which means their volatility and potential drawdowns are quite similar.

Verdict? Both VEU

and IXUS

IXUS

+0.99%

are excellent, broadly diversified international equity ETFs. Choosing between them might as well come down to flipping a coin, but it's worth keeping both on your watchlist for opportunities in tax loss harvesting.

Please note this article is for information purposes only and does not in any way constitute investment advice. It is essential that you seek advice from a registered financial professional prior to making any investment decision.