Vanguard VT vs iShares IEFA: Is Global Diversification or International Exposure the Better Choice for Investors? | The Motley Fool
Choosing between the Vanguard Total World Stock ETF (VT -0.17%) and the iShares Core MSCI EAFE ETF (IEFA -0.95%) depends on where an investor wants their borders to end.
VT acts as a diversified global solution by including U.S. stocks and emerging markets, while IEFA excludes North America, focusing exclusively on established international economies. Here’s how the two compare on the most important factors.
Snapshot (cost & size)
| Metric | IEFA | VT |
|---|---|---|
| Issuer | iShares | Vanguard |
| Share price (as of Sept. 18, 2026) | $97.76 | $158.04 |
| Expense ratio | 0.07% | 0.06% |
| 1-yr return (as of Sept. 18, 2026) | 17.8% | 18.2% |
| Dividend yield | 3.29% | 1.55% |
| Beta (5Y monthly) | 0.89 | 0.98 |
| Assets under management (AUM) | $194.4 billion | $101.7 billion |
Beta measures price volatility relative to the S&P 500; beta is calculated from monthly returns over the available fund history (up to five years). The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.
Both funds are highly affordable for long-term investors, though VT offers a marginally lower expense ratio. For those prioritizing income, IEFA offers a meaningfully higher dividend yield.
Performance & risk comparison
| Metric | IEFA | VT |
|---|---|---|
| Max drawdown (5 yr) | -30.4% | -26.4% |
| Growth of $1,000 over 5 years (total return) | $1,521 | $1,675 |
What’s inside
VT casts a massive net with just over 10,000 holdings, seeking to track the FTSE Global All Cap Index. Its portfolio is heavily influenced by the U.S. tech sector, with technology accounting for 30% of its weight. Its largest positions include Nvidia, Apple, and Microsoft. The fund was launched in 2008 and has paid $2.41 per share in dividends over the trailing 12 months.
IEFA provides a more targeted approach, holding 2,629 stocks across developed markets outside of North America. It tracks the MSCI EAFE IMI Index and leans toward financial services, which accounts for 24% of assets, while tech represents only 11% of the portfolio.
Its top holdings include ASML, HSBC Holdings, and Roche Holding AG. The fund was launched in 2012 and has paid $3.29 per share in dividends over the trailing 12 months.
For more guidance on ETF investing, check out the full guide at this link.
Which looks like the better buy
VT and IEFA both provide well-diversified international exposure, but they differ in sector and geographic focus.
IEFA excludes North American stocks, so it offers less exposure to mega-cap technology stocks than VT. Around 25% of the portfolio is allocated to stocks from Japan, followed by the United Kingdom at 14% and France at 9%. VT, on the other hand, devotes around 65% of its portfolio to North American stocks.
These sector and geographic differences have not appeared to affect risk profiles or performance, however. The two funds offer similar betas and max drawdowns, suggesting they’ve experienced roughly the same levels of volatility over the past five years. While VT has outperformed IEFA in both one- and five-year total returns, the difference is marginal.
Deciding between these two funds will depend on what gaps you’re looking to fill within your portfolio. Investors seeking as much diversification as possible may prefer VT’s broad exposure to developed and emerging markets, while IEFA may be better suited for those seeking access to stocks outside North America.
HSBC Holdings is an advertising partner of Motley Fool Money. Katie Brockman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends ASML, Apple, Microsoft, and Nvidia. The Motley Fool recommends HSBC Holdings and Roche Holding AG. The Motley Fool has a disclosure policy.
