Key Points
EEM charges a much higher expense ratio and sports a lower yield than VXUS
EEM has posted a stronger 1-year total return but suffered a deeper five-year drawdown
EEM tilts heavily toward technology and emerging Asia, while VXUS holds a broader international mix
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Vanguard Total International Stock ETF (NASDAQ:VXUS) and iShares MSCI Emerging Markets ETF (NYSEMKT:EEM) differ sharply on cost, yield, and market exposure, with EEM focusing on emerging markets at a much higher fee, while VXUS offers broader global diversification at a lower price.
VXUS aims to capture nearly the entire non-U.S. stock universe, including both developed and emerging markets, at a minimal cost. EEM, on the other hand, hones in exclusively on large- and mid-cap stocks within emerging economies, appealing to those seeking to dial up exposure to higher-growth regions. This comparison highlights where the funds diverge on expenses, performance, risk, and portfolio construction.
Snapshot (Cost & Size)
| Metric | VXUS | EEM |
|---|---|---|
| Issuer | Vanguard | IShares |
| Expense ratio | 0.05% | 0.72% |
| 1-yr return (as of 2026-01-30) | 29.5% | 36.8% |
| Dividend yield | 3.0% | 2.0% |
| Beta | 0.79 | 0.64 |
| AUM | $135.2 billion | $27.5 billion |
Beta measures price volatility relative to the S&P 500; beta is calculated from five-year weekly returns. The 1-yr return represents total return over the trailing 12 months.
VXUS looks much more affordable, charging just 0.05% annually compared to EEM’s 0.72%. The yield gap is meaningful, too, with VXUS offering a 3.0% dividend yield versus EEM’s 2.0%, which may appeal to income-oriented investors.
Performance & Risk Comparison
| Metric | VXUS | EEM |
|---|---|---|
| Max drawdown (5 y) | -29.43% | -39.82% |
| Growth of $1,000 over 5 years | $1,297 | $1,079 |
What's Inside
EEM concentrates on emerging markets, with technology (28%), financial services (22%), and consumer cyclical (12%) as its biggest sector exposures. The fund holds 1,214 stocks, with the top three—Taiwan Semiconductor Manufacturing, Samsung Electronics Ltd, and Tencent Holdings Ltd —accounting for a sizable portion of assets. EEM has a long track record with 22.8 years in operation, catering to those targeting developing economies and Asian tech giants.
VXUS, by contrast, spreads assets across 8,602 stocks spanning both developed and emerging markets. Its largest sector weights are financial services, industrials, and technology. Top positions—Taiwan Semiconductor Manufacturing Co Ltd, Tencent Holdings Ltd, and ASML Holding NV—are smaller as a percentage of assets, reflecting broader diversification. This makes VXUS a more comprehensive play for international equity exposure.
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What This Means For Investors
Vanguard Total International Stock ETF (VXUS) and iShares MSCI Emerging Markets ETF (EEM) are two international-focused exchange-traded funds (ETFs). For investors seeking exposure to markets outside of the U.S., these two funds are worth consideration.
There are, however, some key differences between the funds. To start, VXUS is an index-tracking ETF with exposure to numerous sectors and regions. About 45% of its exposure is to Asian stocks, 42% to European stocks, and approximately 10% to North, Central, and South American stocks. The fund has a low expense ratio of 0.05% and sports a dividend yield of 3.0%.
EEM, meanwhile, is an ETF that focuses more closely on emerging markets. EEM’s holdings are more concentrated in the Asia region (78% of total holdings), while European stocks are less widely represented (12%). In addition, the fund has a fairly high expense ratio of 0.72% and has a dividend yield of 2.0%.
In sum, VXUS offers investors stable exposure to international stocks at a reasonable cost. EEM, on the other hand, offers greater potential but additional risk along with higher costs. Therefore, investors seeking conservative international exposure may wish to favor VXUS, while those with a greater risk appetite might find EEM appealing.
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Jake Lerch has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends ASML, Taiwan Semiconductor Manufacturing, Tencent, and Vanguard Total International Stock ETF. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
