Is Spring 2026 the Best Time to Buy VXUS for Global Diversification?
Key Points
VXUS gives investors instant exposure to thousands of overseas stocks.
It trades at a much lower multiple than the S&P 500.
Many American investors allocated most of their portfolios to U.S. stocks because they're more familiar with those companies or expect them to outperform their overseas counterparts. However, the S&P 500 looks historically expensive at 28 times earnings, and a growing list of geopolitical conflicts and macroeconomic headwinds could compress that multiple this year.
Therefore, it might be the ideal time to increase your exposure to overseas stocks through the Vanguard Total International Stock ETF (NASDAQ: VXUS), the world's largest global ETF (excluding U.S. stocks) with $636.7 billion in total assets as of the end of February. Let's see why it's one of the easiest ways to diversify your portfolio from the frothy U.S. market.
Will AI create the world's first trillionaire? Our team just released a report on the one little-known company, called an "Indispensable Monopoly" providing the critical technology Nvidia and Intel both need. Continue »
Image source: Getty Images.
What does VXUS own?
VXUS tracks the FTSE Global All Cap (excluding U.S.) index. It holds 8,703 stocks with a median market capitalization of $52.0 billion and an average earnings growth rate of 15.9%. It trades at just 18 times earnings, making it much cheaper than the S&P 500.
Since it's passively managed and simply follows the index, it only charges a low expense ratio of 0.05%. By comparison, actively managed equity ETFs have an average expense ratio of 0.14%.
VXUS allocates roughly 26% of its portfolio to emerging markets, 37% to Europe, 28% to the Pacific region, 8% to North America, and 1% to the Middle East. It has very little direct exposure to the Iran War, but a lot of its portfolio companies are still indirectly exposed to the conflict.
VXUS's top holdings include TSMC (3.4% of the fund), Samsung Electronics (1.6%), ASML (1.3%), and Tencent (0.9%). Unlike U.S. retail investors, who can usually access only some of these companies through U.S.-listed ADRs or over-the-counter (OTC) shares, the fund directly purchases their overseas shares.
Why is VXUS an attractive investment?
Over the past five years, VXUS delivered a total return of 42%. The Vanguard S&P 500 ETF (NYSEMKT: VOO), which tracks the S&P 500, delivered a total return of 74%. However, past performance never guarantees future gains -- and VXUS could outperform VOO over the next five years as investors revalue U.S. and international stocks.
According to the base case of Vanguard's Capital Markets Model (VCMM), overseas (excluding U.S.) stocks could outperform their U.S. counterparts by 2.2% annually from 2023 to 2033. Therefore, if you're worried about U.S. stocks collapsing under the weight of their valuations this year or simply want to increase your overseas exposure, VXUS checks all the right boxes.
Should you buy stock in Vanguard Total International Stock ETF right now?
Before you buy stock in Vanguard Total International Stock ETF, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Vanguard Total International Stock ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $515,294!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,077,442!*
Now, it’s worth noting Stock Advisor’s total average return is 917% — a market-crushing outperformance compared to 185% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
*Stock Advisor returns as of April 2, 2026.
Leo Sun has positions in ASML. The Motley Fool has positions in and recommends ASML, Taiwan Semiconductor Manufacturing, Tencent, Vanguard S&P 500 ETF, and Vanguard Total International Stock ETF. The Motley Fool has a disclosure policy.
