Comparing VYMI and IXUS for International Stock Exposure

Investors seeking to diversify portfolios beyond the U.S. market often weigh the merits of broad-market funds against those with specific dividend strategies [1]. The Vanguard International High Dividend Yield ETF (VYMI) has outperformed the broader iShares Core MSCI Total International Stock ETF (IXUS) over the past decade, leading some analysts to consider it a potential alternative for long-term international exposure [1].

Key takeaways

• The Vanguard International High Dividend Yield ETF (VYMI) has delivered average annual total returns of 10.4% over the last 10 years, compared to 9.3% for the iShares Core MSCI Total International Stock ETF (IXUS) [1].
• IXUS provides broad exposure to over 4,000 stocks across more than 20 countries, while VYMI focuses on approximately 1,600 companies with a tilt toward higher-than-average dividends [1].
• As of March 31, VYMI reported a price-to-earnings (P/E) ratio of 14.5 and a dividend yield of 3.47%, while IXUS held a P/E ratio of 18.1 and a dividend yield of 2.94% [1].
• International stocks have shown strong performance relative to the S&P 500 in early 2026, with some market observers suggesting non-U.S. equities may offer better relative value based on cyclically adjusted price-to-earnings (CAPE) ratios [2].

Contrasting Investment Strategies

The two funds utilize distinct approaches to international investing. IXUS is designed as a low-cost, all-cap index fund that offers wide diversification across both developed and emerging markets [1]. Its holdings include a significant concentration in financial, information technology, and industrial stocks [1]. In contrast, VYMI targets companies expected to provide higher dividend yields [1]. While VYMI also includes emerging market exposure, its top holdings are primarily concentrated in developed markets such as Japan, the United Kingdom, Canada, Switzerland, and Australia [1]. The sector composition of VYMI is less focused on technology, favoring pharmaceutical companies, major international banks, and energy firms like Shell PLC [1].

Market Context and Valuation

The interest in international ETFs comes amid a broader discussion regarding the valuation of U.S. equities compared to the rest of the world. Some analysts point to the CAPE ratio—which averages inflation-adjusted earnings over a decade—to suggest that U.S. stocks are currently among the most overvalued globally [2]. While some market participants argue that U.S. stocks remain attractive, data from early 2026 indicates that non-U.S. stocks have significantly outperformed the S&P 500 [2]. Consequently, several investment newsletters have increased their recommendations for international funds, including VYMI, as part of a strategy to capture potential growth outside of the United States [2].

Why it matters