When evaluating broad-based international equity exchange-traded funds (ETFs), two prominent choices emerge: the Vanguard Total World Stock ETF (VT) and the iShares MSCI ACWI ex U.S. ETF (ACWX). Both pursue global diversification but implement clearly differentiated strategies.
VT integrates U.S. and international securities to cover an extensive spectrum of the global market, holding 10,036 individual stocks. ACWX, alternatively, explicitly excludes U.S. stocks, concentrating on 1,796 companies outside the United States, across both developed and emerging economies.
Expense Structure and Fund Size
Cost considerations markedly favor VT due to its markedly lower expense ratio of 0.06%, compared with ACWX’s 0.32%. This significant disparity positions VT as the more cost-efficient option for investors maintaining positions over the long term. Asset size also diverges notably, with VT commanding $62.5 billion in assets under management (AUM) compared to ACWX’s $8.53 billion, indicating greater investor capital commitment and potentially enhanced liquidity for VT.
Returns and Dividend Analysis
Examining one-year returns as of late January 2026 reveals ACWX delivering a total return of approximately 34.2%, outperforming VT’s 19.76% over the same period. However, over a five-year horizon, the growth of a hypothetical $1,000 investment is higher for VT ($1,527) than for ACWX ($1,267), indicating stronger cumulative multi-year gains for the Vanguard fund.
Dividend yield represents another critical facet for income-focused investors. ACWX offers a yield of 2.7%, surpassing VT’s yield of 1.77%. This difference may render ACWX more appealing to those prioritizing distributions. However, payout frequency differs: VT pays quarterly dividends, potentially favored by investors desiring regular cash flows, while ACWX distributes dividends biannually.
Risk Measures and Volatility Considerations
Risk-adjusted measures highlight variations between the funds. Beta coefficients, calculated over five-year weekly returns relative to the S&P 500 index, stand at 0.92 for VT and 0.74 for ACWX. A higher beta suggests VT exhibits more price volatility relative to the market benchmark. Additionally, maximum drawdowns over five years reveal VT declining 26.38% from peak to trough, while ACWX experienced a deeper peak-to-trough fall of 30.06%, signifying greater susceptibility to downside risk during turbulent periods.
Portfolio Composition and Geographic Emphasis
VT's vast portfolio blends domestic and international equities, with technology, industrials, and financial services sectors prominently represented. The top holdings are heavily weighted toward U.S. market leaders such as Nvidia, Apple, and Microsoft, reflecting the fund’s substantial domestic exposure within its 10,036-stock universe.
By contrast, ACWX excludes U.S. equities, targeting multinational and regional firms based across Asia, Europe, and other developed and emerging regions. Its major positions include Taiwan Semiconductor Manufacturing, Tencent Holdings, and ASML Holding, showcasing a strong presence in the technology and industrial sectors but with a decidedly global tilt across 1,796 constituents.
Considerations for Investors
The differing structures of these funds influence investment suitability. Created within a two-month window of each other, VT has delivered significantly higher comprehensive returns since inception in 2008, nearly 150% greater than ACWX. However, investors seeking dedicated international exposure without U.S. market influence may prefer ACWX’s defined focus. The larger asset base and broader diversification of VT may afford some advantages in risk mitigation and liquidity.
Investors should also be mindful that international equities embed distinct risks compared to domestic stocks. Both funds’ foreign components can fluctuate in response to region-specific economic and political developments, potentially augmenting volatility beyond typical U.S.-centric exposure. Monitoring geopolitical and economic realities in the countries underlying these ETFs can provide valuable context for portfolio performance analysis.
Terminology and Metrics Definition
- ETF (Exchange-traded fund): An investment vehicle that tracks an index and trades on stock exchanges similarly to individual stocks.
- Expense ratio: The annual fee expressed as a percentage of assets dedicated to operating the fund.
- Dividend yield: Annual dividend payments divided by a fund’s share price, indicating income return.
- Total return: Aggregate gain including price appreciation and dividends reinvested over a specified period.
- Beta: Statistical measure of volatility relative to a benchmark, with values above 1 indicating higher sensitivity.
- AUM (Assets Under Management): Total market value of assets a fund manages.
- Max drawdown: Maximum observed loss from a market peak to trough during a period.
- Large-cap and mid-cap stocks: Companies categorized by market capitalization size.
- Developed and emerging markets: Classifications distinguishing mature economies from those in earlier developmental stages.
Ultimately, understanding these factors aids investors in selecting the ETF aligned with their investment horizons, income requirements, and risk tolerance related to global equity portfolios.