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ETF Specialist

The Cheapest Fund for All-Cap, Developed-, and Emerging-Markets Exposure

Vanguard uses this fund in its target-date and LifeStrategy funds.

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Vanguard made a bold move in June when it announced that it will be adding onshore-listed China A-shares to the  Vanguard FTSE Emerging Markets ETF (VWO) portfolio later this year. However, this emerging-markets fund will be the only one of Vanguard’s international-equity funds to make this addition (although Vanguard may decide to add China A-shares to other funds at a later date).  Vanguard Total International Stock ETF  (VXUS), which holds both developed- and emerging-markets stocks, will continue to track its current index, which does not include China A-shares.

With a 0.14% expense ratio, Vanguard Total International Stock ETF is a very cheap and efficient way to gain access to international equities. Funds in the foreign large-blend Morningstar Category (which includes actively managed funds) carry a median expense ratio (investor share class) of 1.06%. In fact, this Vanguard Total International Stock ETF is used in Vanguard’s target-date and LifeStrategy allocation funds to cover the entire international-equity allocation. Vanguard does not hold separate international developed- and emerging-markets funds in these allocation funds; instead, it uses this all-in-one fund.

Patricia Oey does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

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