Vanguard (VXUS) vs. iShares (EEM): Which ETF Is Better For Investing in Stocks Outside the U.S.?
Summarize this article with:
By Josh Kohn-Lindquist – Apr 21, 2026 at 4:19PM ESTKey PointsEEM has a higher expense ratio and lower dividend yield than VXUS.EEM delivered a stronger 1-year return but experienced a deeper 5-year drawdown.EEM tilts heavily toward technology and emerging markets, while VXUS is more broadly diversified across developed and emerging economies.The Vanguard Total International Stock ETF (VXUS 1.92%) and iShares MSCI Emerging Markets ETF (EEM 1.47%) differ most in cost, yield, and market exposure, with EEM focusing on emerging markets and charging a higher fee but offering a more concentrated technology tilt.Both VXUS and EEM provide access to stocks outside the United States, but their approaches vary. VXUS spreads investments across developed and emerging markets, while EEM focuses on emerging markets and their leading companies. This comparison unpacks how these differences play out in cost, performance, risk, and portfolio construction.Snapshot (cost & size)MetricVXUSEEMIssuerVanguardISharesExpense ratio0.05%0.72%1-yr return (as of 2026-04-21)40.5%54.4%Dividend yield2.99%2.16%Beta0.940.95AUM$582.3 billion$24.9 billionBeta measures price volatility relative to the S&P 500; beta is calculated from five-year monthly returns. The 1-yr return represents total return over the trailing 12 months.VXUS is much more affordable with a significantly lower expense ratio and offers a higher dividend yield, but EEM has delivered incredible returns over the last year.Performance & risk comparisonMetricVXUSEEMMax drawdown (5 year)-29.46%-39.8%Growth of $1,000 over 5 years$1,530$1,323What's insideEEM is built for investors seeking concentrated exposure to emerging markets, with 1,222 holdings as of its 23rd year. Technology dominates at 32%, followed by financial services and consumer cyclicals. Top positions include Taiwan Semiconductor Manufacturing at nearly 14%, Samsung Electronics, and SK Hynix, resulting in a sizable tilt toward Asian tech giants.VXUS, by contrast, casts a much wider net with more than 8,600 holdings, spreading assets across both developed and emerging economies. Its largest sector weights are financial services, industrials, and technology, and its top holdings -- Taiwan Semiconductor Manufacturing, Samsung Electronics, and ASML -- show similar names, but at much lower concentrations, supporting broader diversification.For more guidance on ETF investing, check out the full guide at this link.What this means for investorsSince 2011, VXUS and EEM have delivered annualized total returns of 6.7% and 4.2%, respectively, highlighting the former’s track record of relative outperformance. Buoyed by an expense ratio that is .67 percentage points lower and a dividend yield that is nearly one percent higher (currently), VXUS has not only been the better compounder, but did so with a smaller 5-year drawdown.I could only look to buy VXUS personally, especially since the two ex-U.S. ETFs already overlap in two of their top three holdings. Furthermore, while EEM has over 1,200 holdings, it allocates 14% to Taiwan Semiconductor Manufacturing. While TSM may be one of the most important companies of our time, it has very high geopolitical risk, which makes EEM riskier than advertised, in my opinion. Meanwhile, TSM is also VXUS’s top holding, but it only accounts for 3.4% of the fund. Rounded out by an additional 8,000-plus other foreign holdings, VXUS also seems to offer much better diversification.Altogether, VXUS is the clear winner to me thanks to its superior diversification, better long-term performance, cheaper fees, and higher dividend yield. With both ETFs trading at roughly 18 times earnings, I’ll happily pick VXUS.Read NextMar 27, 2026 •By Dave KovaleskiGlobal Climate ETF or Emerging Markets: Which Has Better Returns?Mar 27, 2026 •By Jake LerchInternational ETFs: EEM and IEFA Offer Distinct Global ETF ChoicesMar 27, 2026 •By Jake LerchEEM vs. SPGM: EEM Delivers Higher Returns but Costs More Than SPGMMar 26, 2026 •By Jake LerchEmerging Market Showdown: IEMG Offers Lower Fees Compared to EEMMar 26, 2026 •By Sarah SidlowEEM Offers Focused Growth While IXUS Provides Broad SafetyMar 26, 2026 •By Jake LerchEmerging Markets ETFs: EEM Boasts Higher Returns, SCHE Has Lower FeesAbout the AuthorJosh Kohn-Lindquist is a contributing Motley Fool stock market analyst covering consumer goods, industrials, and technology stocks. Previously, Josh was a senior mutual fund accountant at Gemini Fund Services. He holds a bachelor’s degree in business management from the University of South Dakota.TMFJorykoX@JorykoliStocks MentionediShares - iShares Msci Emerging Markets ETFNYSEMKT: EEM$62.25(-1.47%)-$0.93Vanguard Total International Stock ETFNASDAQ: VXUS$81.88(-1.92%)-$1.60*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.