VEA vs VWO: Head-to-Head Comparison

Side-by-Side Comparison

Key Differences Between VEA and VWO

VEA (Vanguard FTSE Developed Markets ETF) is a international developed fund managed by Vanguard. VEA provides broad exposure to stocks in developed countries outside the United States, including companies in Europe, Japan, Australia, and Canada. With over 4,000 holdings, it is one of the most diversified international ETFs available. Beginners choose VEA to add international developed market exposure to their portfolios at an incredibly low cost of just 0.05%.

VWO (Vanguard FTSE Emerging Markets ETF) is a emerging markets fund managed by Vanguard. VWO gives investors access to stocks in emerging economies such as China, India, Brazil, Taiwan, and South Africa. These countries have younger populations and faster economic growth potential than developed nations. Beginners should know that emerging markets can be more volatile than developed markets, but VWO offers this higher-growth exposure at a very low cost of 0.08%.

The most notable differences are in fees (0.05% vs 0.08%), number of holdings (4,050 vs 5,830), and 5-year returns (6.50% vs 3.20%).

Holdings Overlap Analysis

VEA and VWO share only 0% of their top holdings. These funds are quite different, making them complementary choices if you want broader market coverage.

Cost Comparison Over Time

If you invest $10,000 and hold for 20 years (assuming 8% annual returns):

Over 20 years, the fee difference amounts to $256 on a $10,000 investment. VEA saves you more in fees over time.

Which One Should a Beginner Choose?

Choose VEA if: You want investors who want developed market international exposure without emerging markets, cost-conscious investors seeking the cheapest way to diversify outside the u.s., portfolio builders who want to pair vea with a separate emerging markets fund like vwo. It's managed by Vanguard with an expense ratio of 0.05%.

Choose VWO if: You want long-term investors who want exposure to the world's fastest-growing economies, those building a globally diversified portfolio who want to pair vwo with vea for full international coverage, contrarian investors who believe emerging markets are undervalued relative to u.s. stocks. It's managed by Vanguard with an expense ratio of 0.08%.

Can You Own Both VEA and VWO?

Absolutely! With only 0% overlap, VEA and VWO complement each other well. A simple portfolio might allocate 60% to one and 40% to the other, or you could pair them with a bond ETF like BND for a complete three-fund portfolio.

Frequently Asked Questions