SwiftUI .rotationEffect() framing and offsetting

You need to adjust the frame yourself in this case. That requires capturing what the frame is, and then applying the adjustment.

First, to capture the existing frame, create a preference, which is a system for passing data from child views to their parents:

private struct SizeKey: PreferenceKey {
    static let defaultValue: CGSize = .zero
    static func reduce(value: inout CGSize, nextValue: () -> CGSize) {
        value = nextValue()
    }
}

extension View {
    func captureSize(in binding: Binding<CGSize>) -> some View {
        overlay(GeometryReader { proxy in
            Color.clear.preference(key: SizeKey.self, value: proxy.size)
        })
            .onPreferenceChange(SizeKey.self) { size in binding.wrappedValue = size }
    }
}

This creates a new .captureSize(in: $binding) method on Views.

Using that, we can create a new kind of View that rotates its frame:

struct Rotated<Rotated: View>: View {
    var view: Rotated
    var angle: Angle

    init(_ view: Rotated, angle: Angle = .degrees(-90)) {
        self.view = view
        self.angle = angle
    }

    @State private var size: CGSize = .zero

    var body: some View {
        // Rotate the frame, and compute the smallest integral frame that contains it
        let newFrame = CGRect(origin: .zero, size: size)
            .offsetBy(dx: -size.width/2, dy: -size.height/2)
            .applying(.init(rotationAngle: CGFloat(angle.radians)))
            .integral

        return view
            .fixedSize()                    // Don't change the view's ideal frame
            .captureSize(in: $size)         // Capture the size of the view's ideal frame
            .rotationEffect(angle)          // Rotate the view
            .frame(width: newFrame.width,   // And apply the new frame
                   height: newFrame.height)
    }
}

And for convenience, an extension to apply it:

extension View {
    func rotated(_ angle: Angle = .degrees(-90)) -> some View {
        Rotated(self, angle: angle)
    }
}

And now your code should work as you expect:

struct TextAloneView: View {

    var body: some View {
        VStack {
            Text("Horizontal text")
            Text("Vertical text").rotated()
        }
    }
}