Both Vanguard FTSE Emerging Markets ETF (NYSEARCA:VWO) and iShares MSCI ACWI ex U.S. ETF (NASDAQ:ACWX) target international stocks, but their approaches diverge. VWO is dedicated to emerging markets, focusing on companies in countries such as China, Brazil, and Taiwan. ACWX, meanwhile, includes both developed and emerging non-U.S. equities, making it a more globally diversified option. This analysis compares their cost, performance, risk, and portfolio composition to help investors weigh which may better match individual goals.

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.

VWO has a considerably lower expense ratio, while both funds currently offer identical dividend yields.

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 Co. (2330.TW), Tencent Holdings Ltd. (0700.HK), and ASML Holding N.V. (AMS:ASML).

By contrast, VWO tilts toward emerging markets, with substantial stakes in technology, financial services, and consumer cyclical sectors. Its largest positions are Taiwan Semiconductor (commonly referred to as TSMC), Tencent, and Alibaba Group Holding Ltd. (9988.HK). TSMC alone makes up over 10% of the fund’s assets. This concentration may introduce greater volatility than ACWI’s broader diversification.

What this means for investors

With both ETFs holding little to no U.S. stocks, investors based in the U.S. should be aware of the risks associated with investing in these ETFs compared to U.S.-centered funds.

International stocks can move very differently from American stocks and exhibit volatility that U.S. investors may not be used to, as those foreign stocks may move more closely in line with the relevant country’s economic and political structures and events.

Most of the top holdings of both ACWI and VWO are companies based in Asia. U.S. investors may want to keep an eye on relevant data and events in the relevant foreign country or continent to better understand the companies and the stock associated with each ETF.

It is also important to note that ACWI pays its dividends semi-annually, while VWO pays quarterly. Investors should consider how often they want to receive dividends throughout the year.

Glossary

ETF: Exchange-traded fund that holds a basket of assets and trades like a stock on exchanges.
Expense ratio: Annual fund operating costs expressed as a percentage of the fund's average assets.
Dividend yield: Annual dividends paid by a fund divided by its current share price, shown as a percentage.
Beta: Measure of how volatile an investment is compared with a benchmark index, often the S&P 500.
AUM: Assets under management; the total market value of all assets a fund manages.
Max drawdown: The largest peak-to-trough decline in an investment's value over a specific period.
Total return: Investment performance including price changes plus all dividends and distributions, assuming reinvestment.
Emerging markets: Economies transitioning toward developed status, often with faster growth and higher investment risk.
Developed markets: Economies with mature financial systems, higher incomes, and more established regulatory frameworks.
Sector exposure: The percentage of a fund's assets invested in specific industries, such as technology or financials.
Index fund: Fund designed to track the performance of a specific market index by holding similar securities.
Large-cap and mid-cap stocks: Shares of companies with large or medium market values, typically more established businesses.

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