Both the Vanguard Total World Stock ETF (VT +0.19%) and iShares MSCI ACWI ex U.S. ETF (ACWX +0.60%) aim to provide broad international equity exposure, but approach it differently. This comparison unpacks costs, returns, risk, and portfolio makeup to help investors decide which approach best meets their needs.

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.

ACWX has higher fees than VT, making VT more affordable for long-term holders. However, ACWX’s dividend yield of 2.7% outpaces VT’s 1.8%, so investors seeking higher income may find ACWX more attractive on payouts.

Performance & risk comparison

What's inside

Launched nearly 18 years ago, ACWX tracks non-U.S. large- and mid-cap stocks, holding 1,796 companies across developed and emerging markets, with a portfolio tilt toward financial services, industrials, and technology. The largest positions are Taiwan Semiconductor Manufacturing (2330.TW), Tencent Holdings Ltd (0700.HK), and ASML Holding N.V. (AMS:ASML).

VT, by contrast, combines both U.S. and international stocks, covering 10,036 holdings, and has a similar sector mix. Top names include Nvidia (NVDA +1.60%), Apple (AAPL 0.07%), and Microsoft (MSFT +3.28%), with a greater reliance on American companies.

What this means for investors

Created only two months apart, VT has substantially outperformed ACWX in the long term, with the Vanguard fund yielding nearly 150% more since 2008. Having nearly 10 times more asset holdings than ACWX helps, and even though VT has a smaller dividend yield, its payout frequency is quarterly, compared to ACWX’s semi-annual frequency, which may be more appealing to investors who prefer more frequent payouts.

This doesn’t mean ACWX doesn’t have its own advantages. The iShares fund has a higher one-year return and a true broad international focus in its top 10 holdings, with companies spanning Asia to Europe. In Vanguard’s fund, its top 10 holdings consist of nine U.S. stocks and one international stock that is the 10th-largest holding.

Regarding both ETFs, investors should be aware that international stocks in their holdings can move very differently from U.S. stocks and exhibit volatility that U.S. investors may not be used to. Those foreign stocks may move more closely in line with the relevant country’s economic and political structures and events, which could add more volatility to both ETFs compared to domestic funds.

U.S. investors may want to keep an eye on relevant events in the relevant foreign country or continent to better understand the international stocks associated with each ETF.

Glossary

ETF (Exchange-traded fund): A pooled investment that trades on an exchange like a stock, tracking an index.
Expense ratio: Annual fund operating costs expressed as a percentage of the fund’s average assets.
Dividend yield: Annual dividends paid by a fund or stock divided by its current market price.
Total return: Overall investment gain, including price changes plus dividends, assuming all payouts are reinvested.
Beta: A measure of an investment’s volatility compared with a benchmark index, often the S&P 500.
AUM (Assets under management): Total market value of all assets managed within a fund or by a firm.
Max drawdown: The largest peak-to-trough decline in value over a specified period.
Large-cap stocks: Shares of companies with relatively large market capitalizations, typically established, mature businesses.
Mid-cap stocks: Shares of medium-sized companies, generally between small startups and large, mature corporations.
Developed markets: Countries with mature, advanced economies and well-established financial markets.
Emerging markets: Countries with developing economies and financial markets that are growing but less mature.
Currency hedging: Strategy used by funds to reduce the impact of foreign exchange rate movements on returns.

For more guidance on ETF investing, check out the full guide at this link.