VXUS vs. IXUS: Which International ETF is the Market's Main Character?

The market is paying close attention to international stocks, and for good reason. After a major comeback in 2025, global equities are the main character in the current financial news cycle. Many major indexes returned more than 20% last year, with some countries seeing gains exceeding 50%. That powerful rally has carried into early 2026, fueling intense investor interest in one-stop diversification.

This search volume is translating directly into performance for the largest international ETFs. As of early February, both leading funds are posting stellar trailing 12-month returns. The Vanguard Total International Stock ETF (VXUS) has climbed 31.83%, while the iShares Core MSCI Total International Stock ETF (IXUS) is up 31.67%. The numbers are nearly identical, highlighting how both are capturing the same broad global momentum.

The trend is clear: investors are looking for low-cost, broad-coverage solutions to ride this wave. The intense search interest in global markets suggests a desire for simplicity and diversification, making these two massive, low-fee ETFs the natural beneficiaries. The question now is which one offers the slightly better fit for capital flowing into international stocks.

The Core Trade-Off: Emerging Markets vs. Developed Markets

The real divergence between VXUS and IXUS isn't in their fees or dividend schedules. It's in their DNA. This is the central tension shaping their risk and reward in today's market cycle.

VXUS is the broader net. It casts a massive 8,600-stock net across both developed and emerging markets, with a roughly 75/25 split. This gives it a higher beta of 1.00, meaning it moves more in sync with the overall market and typically carries higher volatility. That volatility is the price of admission for exposure to faster-growing economies in Asia, Latin America, and elsewhere. For investors chasing the highest potential returns from the global rally, VXUS is the logical choice.

IXUS, by contrast, is more selective. It focuses solely on developed markets, excluding emerging economies. This narrower scope results in a lower beta of 0.76 and historically lower volatility. It trades away the political instability and currency swings of developing nations for the predictability of established markets like Europe and Japan. This makes IXUS the appealing option for more conservative investors seeking stability within their international allocation.

Viewed another way, the choice is between a one-stop shop for global growth (VXUS) and a streamlined vehicle for developed-market stability (IXUS). Both are capturing the same powerful 2025 rally, but their paths and profiles are fundamentally different. The market's current attention is on the broad international story, but the next move will likely hinge on which investor profile-aggressive growth seeker or risk-averse stabilizer-dominates the capital flows.

The Cost & Liquidity Edge: What Drives the Choice

For capital flowing into international stocks, the practical details of cost, yield, and fund size often tip the scales. While both VXUS and IXUS offer broad diversification, the numbers here reveal a clear winner for large-scale investors.

The cost advantage is with Vanguard. VXUS charges a 0.05% annual expense ratio, a full 0.02 percentage points lower than IXUS's 0.07%. That may seem small, but it compounds over time and is a decisive factor for institutional and retail investors alike. More telling is the sheer scale. VXUS commands a massive $558.2 billion in assets under management, dwarfing IXUS's $51 billion. This size isn't just a number; it translates directly into liquidity and operational efficiency, making it the preferred vehicle for large trades.

On the income front, the edge shifts slightly to BlackRock. IXUS offers a marginally higher dividend yield of 3.01% compared to VXUS's 2.96%. This difference, while modest, could matter for income-focused portfolios. However, the timing of payments also differs, with VXUS paying quarterly and IXUS semi-annually, adding another layer of practical consideration.

The bottom line is that VXUS's massive size and lower fee create a powerful flywheel. Its liquidity makes it easier to enter and exit positions without moving the market, a critical advantage for big money. For investors seeking the most efficient, low-cost way to deploy capital into international stocks, VXUS is the more liquid and popular choice. The market's attention is on global growth, and VXUS's structure is built to capture that flow.

Catalysts & What to Watch: The Next Headline

The market's current focus is on the broad international rally, but the next trend cycle will be driven by specific catalysts. For investors choosing between VXUS and IXUS, the key is to watch which global economic narrative takes center stage.

First, monitor global growth data and central bank policies. The next major shift in sentiment will likely favor one market segment over the other. If data shows a strong rebound in emerging economies like China or India, or if central banks in those regions signal aggressive stimulus, the broader exposure of VXUS could gain an edge. Conversely, if developed market stability and policy clarity become the dominant theme, IXUS's focus on those regions might shine. The upcoming earnings season for major multinational corporations will also be a critical test, as their international revenue growth will directly reflect the health of the underlying markets each ETF holds.

Second, watch the performance spread between the two funds. While they are nearly identical in the short term, a widening gap over the coming weeks or months would signal a strong, emerging trend. A consistent outperformance by VXUS would suggest the market is rotating into higher-beta, emerging-market-heavy strategies. A stronger run for IXUS would point to a flight to quality and developed-market safety. This divergence is the clearest signal of which strategy is capturing the next wave of capital.

The bottom line is that the main character for the next trend cycle will be the ETF whose underlying market exposure aligns with the next dominant global economic narrative. The market's attention is now on international stocks as a whole, but the catalysts ahead will force a choice between the aggressive growth path of VXUS and the stable, developed-market route of IXUS. Keep an eye on the data and the performance gap to see which story the market picks up next.