Vanguard VEA Charges 0.03% Annually vs. IShares URTH at 0.24%

The eight-fold difference in expense ratios between these two international ETFs means long-term US investors face materially different cost drag depending on whether they also want domestic...

The two most-discussed international exchange-traded funds for US retail investors carry an eight-fold difference in annual expense ratios, according to a Motley Fool comparison published October 3, 2026. Vanguard's Developed Markets ETF (VEA) charges 0.03% per year, while the iShares MSCI World ETF (URTH) charges 0.24% per year.

The cost gap is the most immediately quantifiable distinction between the two products. On a $100,000 investment held for one year, VEA's expense ratio produces $30 in annual fund-level costs, while URTH's ratio produces $240, a difference of $210 before any market return is considered. Over a 30-year holding period, the compounding effect of that spread is substantially larger, though the precise outcome depends on return assumptions that are unknown at time of purchase.

The two funds also differ in their geographic construction. VEA, managed by Vanguard and listed on NYSE Arca, excludes US equities entirely, according to Vanguard's published fund prospectus. Its holdings are concentrated in developed markets outside the United States, primarily Europe, Japan, and Australia. URTH, managed by BlackRock's iShares division and also listed on US exchanges, tracks the MSCI World Index, which includes the United States as its largest single country weight.

The inclusion of US equities in URTH creates a structural overlap for any American investor who also holds a separate US equity fund or index fund. An investor using URTH alongside a fund such as a total US stock market fund would own US equities twice: once directly and once through URTH's US allocation. VEA, by contrast, provides pure international diversification without that duplication.

The MSCI World Index tracked by URTH historically assigns roughly 65 to 70 percent of its weight to US equities, based on MSCI's published index methodology and periodic factsheets. That means approximately 30 to 35 cents of every dollar invested in URTH is allocated to non-US developed markets, while the remainder stays in domestic equities. URTH's effective international exposure per dollar invested is therefore lower than its name might suggest to a casual reader.

VEA's benchmark is the FTSE Developed All Cap ex US Index, as stated in Vanguard's fund literature. The fund holds thousands of individual securities across dozens of countries. Vanguard has not published the exact current security count for October 2026 in real-time, but prior annual reports placed the number above 3,800 holdings, giving the fund broad diversification within its defined universe.

For US investors building retirement portfolios, the choice between the two products turns on two separate questions: whether they want US equities included in a single international wrapper, and how much they are willing to pay annually for that convenience. The 0.21 percentage point annual cost difference is recoverable only if URTH's construction generates sufficient additional return to offset it, a condition that is not guaranteed and that neither fund can promise.

Expense ratios are disclosed in each fund's prospectus and summarized in SEC-filed Form N-1A registration statements, which are publicly available through the SEC's EDGAR database. Both VEA and URTH are registered investment companies subject to SEC oversight and are required to update their expense disclosures at least annually.

What remains unknown without additional data is each fund's tracking error relative to its respective benchmark, its tax efficiency as measured by historical capital gains distributions, and its average bid-ask spread on US exchanges, all of which affect the true total cost of ownership beyond the stated expense ratio. Those figures are available in each fund's annual report and on the relevant exchange's published market data.

US investors who plan to use either fund in a tax-advantaged account such as an IRA or 401(k) will not face immediate capital gains tax on distributions, reducing but not eliminating the relevance of tax efficiency comparisons. The expense ratio differential remains constant regardless of account type.