Here's the International ETF Quietly Outperforming the S&P 500

Most investors assume the S&P 500 is all the diversification they need. But in 2026, a low-cost international index fund holding thousands of stocks across developed and emerging markets has delivered a stronger year-to-date return than America's flagship benchmark, according to Motley Fool analysis.

If you are looking for signs of financial success in your portfolio, global diversification may deserve a closer look. Here is what is driving the outperformance and what you might want to consider.

What the iShares Core MSCI Total International Stock ETF actually holds

The iShares Core MSCI Total International Stock ETF (NASDAQ:IXUS) tracks the MSCI ACWI ex USA Investable Market Index, covering large, mid, and small-cap stocks from countries outside the United States.

The fund recently held about 4,300 stocks across more than 40 countries, with an expense ratio of just 0.07%, meaning it charges $7 annually for every $10,000 invested, according to Motley Fool. For a single ticker, that is an unusually wide net across global equity markets.

How IXUS has performed against the S&P 500 in 2026

As of late May 2026, IXUS had delivered a year-to-date total return of about 14%, according to iShares. That figure outpaced the S&P 500 over the same stretch, an unusual result given the U.S. market's dominance over the past decade, according to Motley Fool.

International markets, particularly in Europe and parts of Asia, benefited from defense spending increases, stimulus measures, and a weakening dollar that lifted returns for U.S.-based holders of foreign stocks.

A dividend yield nearly triple the S&P 500's

IXUS offered a 12-month trailing dividend yield of 2.93% as of April 30, 2026, according to iShares. That compares to roughly 1.1% for the S&P 500, nearly a three-to-one advantage, according to Motley Fool.

If you rely on your portfolio to generate income in retirement, that gap could make a meaningful difference. International companies, especially those in Europe, tend to return more cash through dividends than their U.S. counterparts, and IXUS captures that pattern broadly.

Global heavyweights anchor the fund's top positions

IXUS is not a bet on obscure or hard-to-research foreign companies. Its largest holdings include some of the most important businesses in the world, spanning semiconductor manufacturing, consumer electronics, and enterprise software.

The top 10 holdings account for roughly 12% to 13% of the fund, a far more even spread than the S&P 500's concentration in a handful of megacaps, according to Motley Fool.

Where the largest positions sit

• Taiwan Semiconductor Manufacturing, 4.34% of the fund.
• Samsung Electronics, about 2%.
• SK hynix, about 1.6%.
• ASML Holding, about 1.7%.
• Tencent Holdings, about 0.8%.

How IXUS spreads your money across countries

Japan represents the largest country allocation at about 15.4% of the fund, followed by Taiwan at 8.6%, the United Kingdom at 8.5%, and Canada at 8.3%, according to iShares.

South Korea, China, France, Switzerland, and Germany each account for between 5% and 7%. This geographic spread means no single country dominates the portfolio, which could help cushion your holdings if any one economy hits a rough patch or faces a sudden policy shift.

Where IXUS has lagged over longer stretches

One strong year does not erase a longer track record that has trailed the U.S. benchmark. Over the past 10 years, IXUS delivered average annual returns of about 8.7%, according to iShares performance data as of March 31, 2026. The S&P 500 averaged roughly 13.09% annualized over the same period, according to PortfoliosLab.

That gap represents a decade in which U.S. tech megacaps drove outsized returns. Past stretches of U.S. dominance have not lasted indefinitely, but the difference is worth acknowledging before adjusting your allocation.

International exposure as a complement, not a replacement

IXUS is not created to replace your U.S. holdings, and most financial planners would likely treat it as a complement to a domestic core. The fund's net assets stood at about $58.3 billion as of late May 2026, reflecting broad institutional and retail adoption, according to iShares.

Its low expense ratio and wide coverage make it a straightforward option if you want meaningful global exposure without researching individual foreign markets.

Bottom line

IXUS has made a compelling case in 2026 by outrunning the S&P 500 with a broadly diversified, low-cost portfolio. Its higher dividend yield and lighter concentration in any single stock or country give it qualities that may complement a U.S.-heavy allocation.

If you are ready to start investing beyond domestic borders, the longer-term record suggests tempering expectations while recognizing that diversification across geographies has historically smoothed returns over full market cycles.