In the five years to September 2026, VXUS returned 9.4% a year and VEA returned 10.3%, dividends reinvested. VXUS holds companies in both developed and emerging markets outside the US. VEA holds only the developed ones. The choice is whether to own countries like China, India and Brazil.
For a representative saver about twenty years from retirement, investing in a taxable account: On known costs alone, VXUS and VEA come out about even here. VEA's 8.4-point lead in the plan's success rate comes from how the two funds performed over the last five years, so it holds only if those years repeat. For VXUS and VEA that tax figure is approximate: the model ignores the foreign tax credit and treats all of their dividends as qualified.
With only the known costs — the same market for both funds, differing by fees and dividend tax — the money lasted in 75.1% of 10,000 simulated futures with VXUS and 75.3% with VEA. Using each fund's own returns from October 2021 to September 2026 instead, the figures were 70.5% and 78.9%. Both funds were run against the identical sequence of market shocks.
Emerging markets. VXUS includes emerging markets in proportion to their size; VEA leaves them out. Emerging markets have swung harder and their record has been uneven, so dropping them is a choice, not a correction.
Where the line falls. VEA’s index uses FTSE’s country classification, which counts South Korea as developed. Other index providers draw the line differently, so "developed" funds from different issuers do not hold the same countries.
VXUS tracks the FTSE Global All Cap ex US Index — it holds companies of every size in developed and emerging markets outside the US. VEA tracks the FTSE Developed All Cap ex US Index — it holds companies of every size in developed markets outside the US, including Canada, Europe and the Pacific region.
VXUS charges 0.05% a year and yields 2.34%; VEA charges 0.03% and yields 2.41%.
Returns and volatility are measured from monthly returns with dividends reinvested over 60 months — one sample from one market, and weak evidence for telling two broad funds apart, which is why the known-cost result is reported first. Dividends are taxed at 15% in a taxable account by default, the qualified rate most households pay; the page also shows the 0% and 20% brackets. It is the only tax modeled. A 3.8% net investment income tax can also apply to dividends once modified adjusted gross income passes $200,000 ($250,000 joint); it is not included. Retirement spending is held at 70% of income in today's dollars, and contributions exclude any employer match.
VXUS is broader; VEA leaves out emerging markets. The known costs between them are small, so the choice comes down to whether you want to own emerging markets at all.
Yes. Pairing a developed-markets fund with an emerging-markets fund lets you choose the split, rather than taking the market proportion VXUS holds.