Vanguard or iShares: Which International ETF is Better?

June 11, 2026

The Vanguard FTSE Developed Markets ETF (NYSEMKT:VEA) is known for its low costs and offers broader geographic exposure, including Canada. In contrast, the iShares Core MSCI EAFE ETF (NYSEMKT:IEFA) is focused solely on developed markets outside the U.S. and boasts higher distribution yields.

Both funds are popular choices for those looking to invest internationally, but they have different approaches. Their unique index constructions, particularly regarding Canadian investments and the inclusion of smaller firms, may affect their long-term performance differently.

Snapshots (cost and size)

metric	VEA	IEFA
Publisher	vanguard	ishares
expense ratio	0.03%	0.07%
1 year return (as of June 8, 2026)	28.10%	19.60%
dividend yield	2.70%	3.30%
beta	0.83	0.79
parrot	$304.3 billion	$182.5 billion

Beta reflects the price volatility in comparison to the S&P 500. It is derived from five years of monthly returns. The one-year return highlights total returns for the next 12 months. The dividend yield mentioned is for the trailing 12 months.

Vanguard’s fees are quite low, with just a $3 cost for every $10,000 invested annually. The iShares fund is also attractively priced, but its allure might lie in its higher dividend yield of 3.30%, which surpasses that of its counterpart by 0.62 percentage points.

Comparing performance and risk

metric	VEA	IEFA
Maximum drawdown (5 years)	(29.70%)	(30.40%)
$1,000 growth in 5 years (total return)	$1,546.00	$1,457.00

What’s inside

The iShares Core MSCI EAFE ETF (NYSEMKT:IEFA) intentionally leaves out U.S. and Canadian stocks, focusing instead on a diverse group of 2,621 developed market companies across Europe, Australia, and Asia. Key investments include ASML Holding NV (NYSE:ASM1) 2.74%; HSBC Holdings PLC (NYSE:HSBC) 1.27%, and Roche Holding AG (SIX:ROP.SW) at 1.14%. Established in 2012, this fund emphasizes financial services (23%), followed by industrials (20%) and technology (12%). Over the last year, it distributed $3.18 per share in dividends.

On the other hand, the Vanguard FTSE Developed Markets ETF (NYSEMKT:VEA) follows a different index, which includes roughly 7.50% Canadian stock exposure, leading to a larger total of 3,873 holdings. Major positions include Samsung Electronics Co., Ltd. (KRX:005930) 2.26%, ASML Holding NV 1.78%, and SK Hynix Co., Ltd. (KRX:000660) 1.54%. Founded in 2007, it also allocates 23% to financial services, 19% to industrials, and 14% to technology. The projected dividend for the upcoming year stands at $1.88 per share.

For further insights on ETF investments, you can refer to a comprehensive guide.

What it means for investors

Both ETFs are designed to offer extensive diversification and coverage of broad international markets.

However, one distinguishing factor is that the Vanguard ETF includes Canadian stocks, while the iShares version does not contain any North American stocks at all. Although this may seem subtle, it is noteworthy since 11.2% of VEA’s holdings are Canadian, making it the third-largest country representation after Japan (21%) and the UK (12%).

Conversely, the iShares ETF relies heavily on Japan (25%) and the UK (14%), with France following at 9%.

This difference matters not just for diversity but also for returns. The Vanguard ETF has consistently performed better, achieving a 25% return over the past year compared to IEFA’s 16%. Historically, VEA’s returns have averaged 15-13% more annually relative to IEFA over three years, continuing the trend over five and ten years.

Given these factors, the Vanguard ETF appears to be the more appealing choice thanks to its lower expense ratios.

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The Motley Fool recommends both the Vanguard FTSE Developed Markets ETF and HSBC Holdings. Additionally, the Motley Fool has a disclosure policy regarding its positions in mentioned stocks.

Vanguard vs. iShares: Which is the better international ETF? Originally published by The Motley Fool