VXUS offers full global diversification outside the U.S. It covers both developed and emerging markets at a rock-bottom cost.

VYMI adds income with a value tilt. Higher yield and lower valuations make it appealing for income-focused investors.

You can mix and match based on your goals. Use VXUS for broad exposure, VYMI for income, or combine both to balance growth and yield.

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Have You read The New Report Shaking Up Retirement Plans? Americans are answering three questions and many are realizing they can retire earlier than expected.

U.S. investors tend to have a strong home country bias. On average, portfolios are heavily tilted toward domestic stocks, often well above the U.S.’s roughly 60% share of global market capitalization.

Some of that is understandable. Familiar companies, easier access, tax efficiency, and decades of strong performance all reinforce that preference.

It’s also been encouraged by some of the biggest names in investing. For example, Warren Buffett has famously said to "never bet against America." Even Jack Bogle, the late founder of Vanguard, also leaned toward a U.S.-heavy allocation. For a long time, that approach has worked.

But the outlook may be shifting. Vanguard’s latest 2026 market outlook projects relatively modest returns for U.S. equities over the next decade, in the range of 4% to 5% annually. In contrast, international stocks are expected to do better, with projected returns of 5% to 7% for equities outside the U.S.

A big part of that comes down to valuations. High starting valuations have historically been associated with lower future returns.

One commonly used measure is the cyclically adjusted price-to-earnings ratio, or CAPE ratio, also known as the Shiller P/E. As of March 23, it sits at 37.92, one of the highest readings on record and second only to the peak seen in December 1999 before the dot-com crash.

So if you’re inclined to take Vanguard’s view seriously, the question becomes how to position for it. The good news is you don’t need to overhaul your portfolio or venture into unfamiliar territory. There are straightforward ways to add international exposure using simple, low-cost ETFs. Here are two that stand out for me.

The default option for many investors looking to diversify globally is the Vanguard Total International Stock ETF (NASDAQ: VXUS). For a very affordable 0.05% expense ratio, this ETF provides exposure to more than 8,700 stocks through the FTSE Global All Cap ex-US Index.

Importantly, VXUS includes both developed and emerging markets. On the developed side, you’re getting exposure to countries like Japan, the U.K., Canada, and France. On the emerging markets side, you’ll find economies like China, Taiwan, and India.

This ETF works especially well as a complement to a U.S. total market fund. You can simply add VXUS in whatever proportion fits your portfolio. For example, if your goal is to mirror global market cap weights, a 60/40 split between U.S. and international equities is a reasonable starting point.

If you’re looking to generate more income from your international allocation, the Vanguard International High Dividend Yield ETF (NASDAQ: VYMI) is another option to consider.

Compared to VXUS, it’s only slightly more expensive, charging a 0.07% expense ratio, but it offers a higher 3.28% trailing 12-month yield.

VYMI tracks the FTSE All World ex-US High Dividend Yield Index. It screens for the higher-yielding half of the international stock universe and then weights those companies by market capitalization.While it’s more selective than VXUS, it’s still highly diversified, holding 1,532 stocks.

That dividend screen also introduces a value tilt. VXUS currently trades at a trailing price-to-earnings ratio of about 18.2, while VYMI comes in cheaper at around 14.8. Despite that, the difference in quality is minimal. VXUS has an average return on equity of roughly 13%, while VYMI is close behind at 12.8%.

All this makes VYMI a useful option if you’re focused on income and still want exposure to relatively attractively valued international equities.

Regardless of which route you take, whether it’s broad exposure through VXUS or a higher-income tilt with VYMI, the most important decision isn’t the ETF itself. It’s how you stick with it.

Set a target allocation that aligns with your goals, risk tolerance, and time horizon. Then commit to it. Rebalance periodically to maintain that allocation, but avoid the temptation to shift things around based on short-term performance or headlines.

International stocks may outperform. They may not. But trying to tactically time those shifts is far more likely to hurt your results than help them. A disciplined approach, combined with low-cost, diversified ETFs, is what ultimately drives long-term success.

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