International ETFs VEA and IXUS Deliver 33%+ Returns as Global Markets Surge

International Markets Shine After Years of Underperformance

International equity markets experienced a dramatic turnaround in 2025, with both the Vanguard FTSE Developed Markets ETF (NYSEMKT:VEA) and iShares Core MSCI Total International Stock ETF (NASDAQ:IXUS) posting impressive returns exceeding 33%. This remarkable performance marked a significant shift after more than a decade of U.S. market dominance.

Key Performance Metrics

The two ETFs delivered nearly identical one-year returns through June 1, 2026, with VEA returning 33.40% and IXUS achieving 33.20%. However, their approaches to international exposure differ substantially in both cost structure and geographic focus.

VEA maintains a significant cost advantage with an expense ratio of just 0.03%, compared to IXUS's 0.07% fee. Despite this lower cost, VEA currently offers a dividend yield of 2.60%, slightly below IXUS's 2.80% payout to shareholders.

Different Strategies, Similar Results

While both funds target international diversification for U.S. investors, their methodologies vary considerably. VEA concentrates exclusively on developed markets, holding 3,873 stocks across Canada, Europe, and Pacific regions. The fund's portfolio weighs heavily toward financial services (23%), industrials (19%), and technology (14%).

IXUS takes a broader approach, encompassing both developed and emerging markets through 4,160 holdings. This expanded scope includes exposure to fast-growing economies like India, China, and Brazil alongside traditional developed markets. The fund's sector allocation shows technology at 18%, financial services at 22%, and industrials at 16%.

What Drove the 2025 Comeback

Several factors contributed to international markets' stellar 2025 performance. A weakening U.S. dollar provided tailwinds for international investments when converted back to dollars. European fiscal stimulus measures boosted regional economies, while artificial intelligence-driven growth across Asian technology companies attracted significant capital flows.

Additionally, many international markets appeared attractively valued compared to historically expensive U.S. stocks, prompting a rotation among global investors seeking better opportunities abroad.

Risk and Volatility Considerations

Both ETFs demonstrated resilience during challenging periods, with maximum five-year drawdowns reaching -29.70% for VEA and -30.10% for IXUS. VEA exhibits slightly lower volatility with a beta of 0.83 compared to IXUS's 0.77, measured against the S&P 500.

Over the five-year period ending in 2026, $1,000 invested in VEA would have grown to $1,593, while the same investment in IXUS would have reached $1,502.

Fund Holdings and Asset Allocation

VEA's top positions include Samsung Electronics (2.26%), ASML (1.78%), and SK Hynix (1.54%). The fund, launched in 2007, distributed $1.88 per share in dividends over the trailing twelve months.

IXUS features Taiwan Semiconductor Manufacturing as its largest holding at 4.24%, followed by Samsung Electronics (2.25%) and SK Hynix (1.96%). Since its 2012 inception, IXUS has paid $2.74 per share in annual dividends.

Asset Under Management Scale

VEA commands significantly larger assets under management at $304.3 billion compared to IXUS's $58.7 billion, reflecting its longer track record and Vanguard's dominant position in low-cost indexing.

Looking Forward

The question facing investors is whether international markets can sustain their momentum after such strong performance. Both funds remain attractively valued relative to U.S. equities, even following their impressive gains.

Analysts note that VEA offers the most cost-effective route to developed market exposure, while IXUS provides comprehensive global diversification including emerging market opportunities. The choice between them largely depends on an investor's risk tolerance and desired geographic exposure.

The 2025 international market resurgence serves as a reminder of diversification's importance in portfolio construction, particularly after extended periods of single-market dominance.