Vanguard's 0.05% International Stock ETF Just Outpaced the S&P 500 for the First Time in Five Years

VXUS provides broad international exposure by tracking the FTSE Global All Cap ex US Index, holding more than 8,000 stocks across developed and emerging markets outside the United States. The fund charges 0.05% annually, manages about $137 billion, and distributes a yield near 2.6%. Returns come from foreign dividends and price appreciation, with results for U.S. investors influenced by currency translation back into dollars. In 2026, the U.S. dollar has strengthened versus the euro, compressing translated international earnings, while economic indicators such as a narrowed trade deficit suggest a similar environment. Despite encouraging year-to-date results, five- and ten-year performance trails the S&P 500 substantially.

"VXUS tracks the FTSE Global All Cap ex US Index, holding more than 8,000 stocks across developed and emerging markets outside the United States. It charges 0.05% in annual expenses, manages roughly $137 billion, and pays a distribution yield near 2.6%. The return engine is straightforward: dividends from foreign companies plus price appreciation, translated back into dollars. That currency translation is half the story right now."

"The US dollar has strengthened against the euro, moving from a 12-month low of $1.198 per euro on January 27, 2026, to roughly $1.16 per euro in mid-May. A stronger domestic currency mechanically compresses the value of international earnings for US investors when translated back into corporate reporting, completely separate from how the underlying foreign businesses are executing. On the domestic side, the trade deficit narrowed to $60.3 billion in March 2026, after expanding to $72.9 billion in December, suggesting a similar economic environment."

"Year-to-date performance is encouraging, but a longer view tempers the story. Over five years, VXUS has returned about 51.3% against the S&P 500 proxy's roughly 85.4%. Ten-year cumulative numbers widen the gap even further, with VXUS at roughly 145% versus a staggering 313.8% for VOO. An investor who held VXUS for a decade secured real returns, but"

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