Better iShares International ETF: IEFA vs. IXUS

While both the iShares Core MSCI Total International Stock ETF (NASDAQ:IXUS) and the iShares Core MSCI EAFE ETF (NYSEMKT:IEFA) track non-U.S. equities with the same expense ratio, IXUS includes emerging markets for broader exposure, whereas IEFA offers a slightly higher yield and is focused solely on developed markets.

Both IXUS and IEFA aim to give investors access to international equities, but their coverage differs: IXUS includes both developed and emerging markets, while IEFA is limited to developed markets outside the U.S. and Canada. This comparison unpacks how those differences play out in cost, performance, risk, and portfolio makeup.

Snapshot (cost & size)

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.

Both funds are equally affordable on fees, but IEFA offers a modestly higher dividend yield, which may appeal to income-focused investors.

Performance & risk comparison

What's inside

IEFA tracks developed markets in Europe, Australasia, and the Far East, holding 2,589 companies with a sector tilt toward financial services (22%), industrials (20%), and healthcare (11%). Its largest positions are ASML, Roche, and HSBC, and the fund has been operating for 13.3 years. IEFA excludes emerging markets, which can lower volatility but may limit upside potential during strong emerging market cycles.

In contrast, IXUS holds over 4,100 stocks and covers both developed and emerging markets, offering broader diversification. Its sector allocations lean toward financial services, industrials, and basic materials, with top holdings in Taiwan Semiconductor Manufacturing, ASML, and Samsung Electronics. This makes IXUS a more comprehensive international option for those seeking exposure beyond developed economies.

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What this means for investors

Choosing between the iShares Core MSCI Total International Stock ETF (IXUS) and the iShares Core MSCI EAFE ETF (IEFA) comes down to what kind of exposure investors want for their portfolio.

IEFA’s focus on developed markets, excluding North America, means it avoids the volatility of emerging markets, and its large assets under management of $162.6 billion provides high liquidity. However, investors miss out on the high-growth potential of emerging markets.

IXUS is a truly international ETF since it includes emerging markets. It also offers greater diversification than IEFA given it holds more than 4,000 stocks. IXUS can deliver higher returns than IEFA due to the growth of emerging markets, although these regions are more economically and politically volatile than developed markets.

Since both ETFs sport the same expense ratio, IXUS is for investors who want global exposure, including emerging markets. IEFA is for more conservative investors who desire the slightly higher dividend yield and the stability offered by developed markets.

HSBC Holdings is an advertising partner of Motley Fool Money. Robert Izquierdo has positions in ASML and Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends ASML and Taiwan Semiconductor Manufacturing. The Motley Fool recommends HSBC Holdings and Roche Holding AG. The Motley Fool has a disclosure policy.