2 ETFs That Are Surging While U.S. Stocks Are Slumping

It’s been a rough start to 2025 for U.S. stocks. All three major U.S. indexes are down, with the tech-focused Nasdaq Composite (NASDAQINDEX: ^IXIC) faring the worst, 13.4% off its highs from December. Many big-name stocks have followed the same path, too.

Ups and downs are a natural part of investing. However, there are moves investors can make to soften the blow or take advantage of opportunities. If you’re looking to hedge against uncertainty surrounding U.S. stocks, try two exchange-traded funds (ETFs) that let you invest in a wide variety of international stocks: the Vanguard Total International Stock ETF (NASDAQ: VXUS) and the Vanguard International High Dividend Yield ETF (NASDAQ: VYMI). Here’s why you should consider these two international ETFs.

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VYMI data by YCharts

Why investors should consider international stocks for their stock portfolios

The reason for investing in international stocks comes down to a word you’ve probably heard plenty of times no matter how new you might be: diversification.

“Don’t put all your eggs in one basket” is a saying that applies to many aspects of life, including investing. Ideally, your stock portfolio is diversified in industries, company sizes, investment styles, and geographic location. The latter is often overlooked because U.S. stocks have historically outperformed international stocks. However, there are country-specific risks that warrant diversifying globally.

There’s no set amount of your portfolio that should be in international stocks, but I personally try to keep around 10% of my stock portfolio there.

1. Vanguard Total International Stock ETF

This ETF is a great option because it contains over 8,500 stocks of all sizes in both developed and emerging markets. It’s one thing to be diversified by having international stocks; it’s another to make sure your international holdings are diversified. This ETF does both.

Broadly speaking, developed markets are countries with mature financial markets and stable infrastructure. Examples include the U.K., Japan, Canada, and Australia. Emerging markets are countries with growing financial markets and improving infrastructure, like China, Mexico, Brazil, and India.

Both market types offer different benefits and risks, so being able to invest in both provides a nice balance. Developed markets are more stable but may have slower growth; emerging markets are more volatile but can have higher growth potential.

Here is how the ETF is dividend by region:

Data source: Vanguard. Percentages as of Jan. 31.

If you’re looking for a well-diversified international ETF that covers a wide range, this one checks the boxes.

2. Vanguard International High Dividend Yield ETF

This ETF covers a lot of ground with international stocks, but it’s much smaller than the Vanguard Total International ETF, containing “only” around 1,500 stocks.

Here is how it’s divided by region:

Data source: Vanguard. Percentages as of Jan. 31.

What separates this ETF is that it focuses on international companies that are predicted to have above-average dividend yields. At the time of this writing, the ETF’s yield is around 4.4%, far higher than the S&P 500’s roughly 1.3% yield.

Since the ETF pays out dividends from many companies, the payout amount fluctuates each quarter. The four payouts in 2024 were $0.96, $0.70, $1.01, and $0.62 (all rounded to the nearest cent), averaging around $0.82 per share.

An ETF that pays a high dividend can help provide a buffer for investors in case stock prices fall or become stagnant. It’s somewhat of a safety net. If you’re looking for income (though the amount isn’t consistent) while diversifying your stock portfolio with international stocks, this ETF gets the job done.

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Stefon Walters has positions in Vanguard Total International Stock ETF. The Motley Fool has positions in and recommends Vanguard Total International Stock ETF. The Motley Fool has a disclosure policy.