🌐 Total International

Total international ETFs offer one-stop global diversification — developed and emerging markets in a single fund. But the terminology can be confusing: ACWI includes the US while ACWX excludes it, and the MSCI index family has its own hierarchy. This page clarifies the landscape and helps you choose the right “total world” instrument.

The MSCI index family explained

Before diving into ETFs, understand how the major global indexes relate:

  flowchart TD
    A[**MSCI ACWI**<br/>All Country World Index] --> B[MSCI World<br/>Developed Markets Only]
    A --> C[MSCI Emerging Markets]
    
    B --> D[**US**<br/>~60% of ACWI]
    B --> E[**MSCI EAFE**<br/>Developed ex-US/Canada]
    
    C --> F[China, India, Brazil<br/>Taiwan, Korea, etc.]
    
    E --> G[Europe, Japan<br/>Australia, etc.]

Key distinctions

The confusion: “World” in MSCI terminology means developed markets only, not the entire world. “ACWI” (All Country World Index) is the true global index.

FTSE vs MSCI differences

FTSE (used by Vanguard) and MSCI (used by iShares) classify countries differently:

This matters: VEU/VXUS (FTSE) include Korea as developed; ACWX (MSCI) includes Korea as emerging.

The major total international ETFs

US-Included (ACWI)

These include US stocks — use them for total world exposure in a single fund:

When to use ACWI/VT:

• Single-fund global portfolio (no separate US allocation)
• You want automatic US/international rebalancing
• Tax-advantaged accounts where simplicity matters

The trade-off: You give up control over US vs. international allocation. The market-cap weighting keeps you ~60% US.

Ex-US (ACWX, VEU, VXUS)

These exclude US stocks — use them alongside a US allocation (SPY, VTI):

Comparing ex-US options

VEU vs VXUS — What’s the difference?

Both are Vanguard, both track FTSE ex-US, both are extremely cheap. The difference:

Bottom line: VXUS is slightly broader (more small-caps) and has more assets. VEU is marginally cheaper. For most investors, either works — VXUS is slightly more popular.

Portfolio construction approaches

Approach 1: Single total-world fund

Use VT or ACWI as your entire equity allocation.

Best for: Hands-off investors, tax-advantaged accounts, those who want to avoid behavioral errors.

Approach 2: US + total international (most common)

Combine VTI (US) with VXUS (international).

Best for: Investors who want control over geographic allocation and the flexibility to tilt based on valuations or signals.

Approach 3: US + developed + emerging (most control)

Separate all three: VTI + VEA + VWO (or SPY + EFA + EEM).

Best for: Active allocators who want to adjust developed vs. emerging exposure based on signals.

The VEU/SPY and VXUS/SPY ratios

These ratios show total international vs. US performance:

Current context: After a decade of falling (US dominance), watch for a potential bottom and trend reversal — historically associated with dollar weakness and valuation mean reversion.

Which ETF for which situation?

Quick reference

Sources