Are you considering an international ETF for your portfolio? Indeed, 2021 turned out to be one of the best years on record for ETFs. In this period, exchange-traded funds inflows exceeded $1.22 Trillion. However, 2022 is shaping up to be a different year as the stock market started to experience challenges due to geopolitical issues in Ukraine, inflation, and recession risk. As the stock markets plunged, investors faced volatility not seen since the financial crisis. Even blue chip stocks got affected, albeit for a short time.
When I started investing, it was in the early 2000s. I didn’t know the difference between Mutual Funds or an index-fund. But, I do recall buying stocks like Netscape and Yahoo, and watching them skyrocket, only to fall shortly after. Indeed, it was not unlike the meme stock craze we see today. Actually, for me, it was a good lesson in diversification.
There isn’t one thing that defines what makes the best international ETF. Some investors look for yield while others look for growth. Some speculate, and others take a buy and hold approach. Also, not all ETFs are alike. For example, some are passively managed, while others are actively managed. And some are even leveraged ETFs! In the end, picking investments is about the investor’s goals and risk tolerance level.
This article will go over the best International ETFs investors can consider in July 2022, adding simple yet reliable diversification to their portfolio.
What Are ETFs?
Today, DIY investors looking to invest their money experience a dizzying array of options. Indeed, investors can buy individual stocks, options, futures, or even CFDs. But the best way to get portfolio diversification is through an index or International ETF.
In general, ETF’s are funds that get passively managed and hold a collection or a basket of stocks. Actively managed ETFs are rare and have a higher fee. Either way, you can buy ETFs from your adviser or in your brokerage account.
Index ETFs are generally known as “Low-Cost Index Funds.” The most common index funds in the United States are from Vanguard, Fidelity, and Schwab. These Index ETFs typically track an index such as the S&P 500, the Dow Jones Industrial, or the Nasdaq. Further, index funds usually hold stocks of each company on the index. So, instead of buying 500 individual companies on the S&P 500, investors could buy an ETF such asVOO.
International ETFs, however, track and replicate the performance of various indexes in a given region, country, or continent. For example, investors seeking Chinese diversification might buy an ETF that tracks the Shanghai exchange.
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What are the Best International ETFs?
The ETF landscape is large and continues to grow every day. By the end of 2021, there were 8,552 globally traded ETFs.
Picking the best stocks is hard. And, it’s caused many active fund managers to underperform the benchmarks. Further, picking international stocks amplifies the complexity as the political landscape, micro, and macroeconomic situations can vary significantly between regions, countries, and even continents.
The best international ETF’s attempt to solve stock-picking underperformance by giving the investor diversification.
Let’s get started and discover some of the best international ETF’s:
10. Vanguard FTSE Europe ETF (VGK)
Europe is a continent with many well-performing companies from diverse industries across the region. There, investors will find technology, banking, defense, and consumer products companies, among others.
Investors looking for the best way to gain exposure to these European companies can consider investing in the Vanguard FTSE Europe ETF. Indeed, this passively managed ETF seeks to track the FTSE Developed Europe All Cap Index’s performance.
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What Makes VGK an Excellent ETF?
An advantage of VGK is that it invests in 1363 stocks in major European markets, including Germany, France, Austria, Netherlands, Italy, United Kingdom, Switzerland, Ireland, and others.
As of 04/30/2022, VGK’s has >$23.4 billion in assets, and its top holdings include Nestle SA, Roche Holding AG, ASML Holding AG, and AstraZeneca plc.
VGK 1-year total return (As of 4/30/2022) is -10.6% and 4.38% a year over the past five years. Also, it has a best-in-class 0.08% expense ratio.
9. SPDR Portfolio Europe ETF (SPEU)
The SPEU is another European ETF worth considering for investors looking to diversify their investments. SPEU provides investors with region-specific exposure who want to focus on the European equities.
SPEU invests in 1,777 Western European companies in Germany, Switzerland, Sweden, Netherlands, France, the United Kingdom, and more.
The fund boasts 207M of assets under management, and its top holdings include Nestle SA, Roche Holding Ltd., ASML Holding NV, and Novartis AG. Further, frugal traders will appreciate the management fees are a low 0.09%.
Since the inception, SPEU ETF in 2002 has continued to provide returns to the investors in line with the benchmark. Its one-year return (as of 04/30/2022) is -7.89%, and its five-year return is 5.39% a year. This international ETF also has a current dividend yield of 3.07%, which is highly competitive.
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8. Global X FTSE Nordic Region ETF (GXF)
Nordic countries in Europe include Sweden, Finland, Denmark, Iceland, and Norway. In these regions, they have become a hotbed for technology and innovation. Investors who look to this international ETF gain exposure to 68 companies like Novo Nordisk, Ericsson, Volvo, and DSV Panalpina.
As of 03/31/2022, GSF smashes the competition with a 1-year gain of 12.88% and a 5-year gain of 9.83%. Further, GFX has over $118 Million in net assets, an expense ratio of 0.5%, and a dividend yield of 0.31%.
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7. Vanguard FTSE Pacific ETF (VPL)
VPL attempts to simulate the performance of the FTSE Developed Asia Pacific All Cap Index. Investors who buy this passively managed international ETF gain exposure to a well-diversified portfolio of 2,496 stocks in Japan, Hong Kong, Singapore, Australia, and New Zealand.
As of 04/30/2022, the most significant holdings included Samsung Electronics Co. Ltd., Toyota Motor Corp, and BHP Group Ltd. Further, the entire fund boasts an impressive $7.9 Billion in assets and a 0.08% expense ratio.
The returns, however, are similar to the broad market. For example, the 1-year return is -13.71%, and the 5-year return is 4.14% annually.
Investors seeking a targeted subset of Asia Pacific stocks need only look at the iShares MSCI Pacific ex-Japan ETF. EPP offers investors exposure to 121 companies in Australia, New Zealand, Hong Kong, and Singapore. Notably, this international ETF does not include Japanese stocks.
EPP’s assets under management exceed $2.4 billion, and its most significant holdings include AIA Group LTD., Commonwealth Bank of Australia, BHP Group Ltd., and CSL Ltd. Further, its expense ratio is 0.47%.
As of 04/30/2022, EPP boasts an impressive 1-year total return of 2.43% and a 5-year total return of 5.5% a year. While these returns might not seem impressive, consider that as of 06/04/2022 the S&P 500 index has a YTD return of -14.34%.
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5. Schwab Emerging Markets Equity ETF (SCHE)
For investors aiming to get exposure to international ETFs, SCHE could be their best choice. It has advantages and great returns that make it attractive to most investors.
Emerging markets are often volatile and risky – which makes them lucrative for investment. For this passively managed ETF, it has over $8.7 billion under management. SCHE invests in emerging market countries such as China, Taiwan, India, and Brazil.
Also, this Schwab ETF holds 1,874 total stocks. Some of these components included in the ETF are real estate, energy, healthcare, and utilities. The top stock holdings include Taiwan Semiconductor Manufacturing, Tencent Holdings, Alibaba Group Holding, and Reliance Industries.
SCHE has an expense ratio of 0.11%, and those who invest in this type of fund receive theirdividendevery six months in June and December. Moreover, as of 04/30/2022, this ETF has a -16.16% 1-year return and a 4.23% annual return over the past five years. Emerging markets are volatile, so this ETF is suitable for investors who have a healthy risk appetite.
Lastly, this is a great fund and can be a good one to provide an investor with global exposure and diversification to offset the United States-based investments.
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The iShares MSCI China ETF is probably the best Chinese international ETF as it has over $6.6 Billion in assets. Indeed, it offers exposure to 619 mid-cap and large-cap Chinese companies such as Tencent, Alibaba, Meituan, and China Construction Bank Corp.
Indeed, China has some of the largest companies in the world outside of the United States. And, more and more investors are paying attention to Chinese companies.
The returns, however, reflect a difficult situation in China, even with an expense ratio is 0.59%. As of 04/30/2022, MCHI boasts a 1-year growth of -34.64% and a 5-year annual growth rate of 2.54%.
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3. Vanguard Total World Stock ETF (VT)
Investors who buy VT gain access to stocks from all over the world. VT offers investors high growth opportunities, but also risk. Indeed, the share price may swing higher, or lower, than an S&P 500 Index ETF. Its top holdings include Alphabet Inc., Microsoft Corp., Apple Inc.
VT is suitable for an investor seeking worldwide diversification and long-term growth from a single fund. The expense ratio is a modest 0.08%.
As of 04/30/2022, the fund holds 9530 individual stocks and its 1-year return is -7.26%, and its five-year return is 9.07% per year. Further, its net assets exceed $32.8 Billion.
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In my opinion, the iShares Core MSCI Total International Stock ETF is, by far, the best international ETF if you’re looking for broad diversification. But, is it right for you? Let’s find out.
Investors looking for an ideal way to tap into the foreign market can use a broad-based approach that combines emerging and developed markets. The IXUS does that. For example, it invests in companies like Taiwan Semiconductor Ltd., Tencent, Alibaba, and Samsung.
The IXUS delivers exposure to 4,352 stocks with a low annual fee of just 0.07%. Having a low standard deviation makes IXUS reliable for conservative investors interested in carving international exposure to their portfolios.
As of 04/30/2022, IXUS has 1-year return of -2.31%. And, it’s 5-year annual return has done well at 10.13%. Further, it has net assets exceeding $29.5 Billion.
While Canada isn’t always considered international, the iShares MSCI Canada ETF wins the year’s Best International ETF. As of 03/31/2022 its 1-year total return is a whopping 20.31% that even Warren Buffet might applaud. EWC’s 5-year return is also impressive at 10.83%. Indeed, EWC offers investors an excellent opportunity to gain exposure to the largest Canadian companies.
The iShares MSCI Canada ETF invests in large-cap Canadian companies such as Royal Bank of Canada, Shopify, Toronto Dominion Bank, and Bank of Nova Scotia. And, the results are impressive.
The expense ratio is 0.50%, and assets are $4.69 Billion.
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FAQ (Frequently Asked Questions)
Are international ETFs a good investment?
International ETFs offer easy diversification by reducing the risk of picking individual stocks.
Which ETF does Warren Buffett recommend?
Warren Buffet often recommends low cost S&P 500 index funds such as SPY, or VOO.
Which is better Vanguard or Fidelity?
Both Vanguard and Fidelity will offer similar returns for similar products. However, traders might find their different services to
How do I choose an ETF?
The best ETFs are liquid (i.e. highly traded), correlate well to their index, and offer low expense ratios.
Are international ETFs Risky?
International ETFs offer exposure to many different countries. As a result, if holdings in one country perform better than another, the differences can be dramatic.
Which is the best international ETF?
In 2021, the best international ETF was iShares MSCI Canada ETF (EWC) with a 1-year total return of 20.31%
The Bottom Line on the Best International ETF
International ETFs offer investors international diversification without the hassle of stock picking.
ETFs are generally less risky than holding individual stocks. However, the tradeoff is that they may underperform the “latest hot-stock of the day.”
FAQs
What is the best ETF to buy 2022? ›
- Best Growth ETFs of October 2022.
- Invesco S&P 500 GARP ETF (SPGP)
- iShares Russell Top 200 Growth ETF (IWY)
- Vanguard Mega Cap Growth ETF (MGK)
- Schwab U.S. Large-Cap Growth ETF (SCHG)
- iShares Russell 1000 Growth ETF (IWF)
- SPDR Portfolio S&P 500 Growth ETF (SPYG)
- United States Natural Gas Fund LP (UNG)
- VanEck Oil Services ETF (OIH)
- Invesco S&P 500 GARP ETF (SPGP)
- VictoryShares U.S. Equity Income Enhanced Volatility Weighted ETF (CDC)
- Invesco S&P 500 High Dividend Low Volatility ETF (SPHD)
- Simplify Interest Rate Hedge (PFIX)
- Vanguard S&P 500 ETF (VOO)
Best Performing ETFs of Last 10 Years: U. S. Equity
The large-cap growth-styled Invesco QQQ Trust ETF (QQQ), with an annualized return of 17.0%, is the best-performing ETF in the U. S. equity category. Selected broad market ETFs have fared quite well despite operating in out-of-favor investing styles.
- ProShares Ultra Bloomberg Natural Gas ETF (BOIL): +270%
- United States Natural Gas Fund LP (UNG): +145.9%
- ProShares Ultra Oil & Gas ETF (DIG): +96.6%
- Direxion Daily Energy Bull 2x Shares (ERX): +95.3%
- Direxion Daily S&P Oil and Gas Exploration & Production Bull 2x Shares ETF (GUSH): +92%
...
Fastest Growing ETFs Of The Year.
| Ticker | FPAG |
|---|---|
| Fund | FPA Global Equity ETF |
| Fund Assets Now ($M) | 17 |
| Assets 12/31/21 ($M) | 1 |
| % Increase | 1259% |
- Vanguard S&P 500 ETF (VOO)
- Schwab U.S. Small-Cap ETF (SCHA)
- Vanguard Total International Stock ETF (VXUS)
- Vanguard FTSE Emerging Markets ETF (VWO)
- iShares Core U.S. Aggregate Bond ETF (AGG)
- iShares iBoxx $ High Yield Corporate Bond ETF (HYG)
- iShares Core Growth Allocation ETF (AOR)
| Ticker | Fund | YTD Rtn |
|---|---|---|
| KMLM | KFA Mount Lucas Index Strategy ETF | +31.36% |
| RISR | FolioBeyond Rising Rates ETF | +30.92% |
| RYE | Invesco S&P 500 Equal Weight Energy ETF | +30.63% |
| VDE | Vanguard Energy ETF | +30.47% |
| Symbol | ETF name | Annual dividend yield |
|---|---|---|
| IVV | iShares Core S&P 500 ETF | 1.25% |
| VOO | Vanguard S&P 500 ETF | 1.24% |
| VTI | Vanguard Total Stock Market ETF | 1.19% |
| ITOT | iShares Core S&P Total U.S. Stock Market ETF | 1.17% |
Two of the most popular ETFs include index funds based on the Standard & Poor's 500 index and the Nasdaq 100 index, which contain high-quality businesses listed on American exchanges: Vanguard S&P 500 ETF (VOO), with an expense ratio of 0.03 percent. Invesco QQQ Trust (QQQ), with an expense ratio of 0.20 percent.
| Symbol | Name | 5-Year Return |
|---|---|---|
| VOOG | Vanguard S&P 500 Growth ETF | 77.27% |
| IVW | iShares S&P 500 Growth ETF | 76.84% |
| IHI | iShares U.S. Medical Devices ETF | 75.02% |
| VUG | Vanguard Growth ETF | 74.79% |
How many ETFs should I own? ›
Experts agree that for most personal investors, a portfolio comprising 5 to 10 ETFs is perfect in terms of diversification. But the number of ETFs is not what you should be looking at. Rather, you should consider the number of different sources of risk you are getting with those ETFs.
Final Thoughts on ETF Returns in the Stock Market
An EFT return should at least have an average of 7% to 10% to match the S&P 500 benchmark. An EFT is great for diversification, fewer broker commissions, and lower expense ratios compared to other stock market options.
You expose your portfolio to much higher risk with sector ETFs, so you should use them sparingly, but investing 5% to 10% of your total portfolio assets may be appropriate.
ETF.com Insight
GOOG has around 405.9M shares in the U.S. ETF market. The largest ETF holder of GOOG is the SPDR S&P 500 ETF Trust (SPY), with approximately 59.79M shares.
ETFs can make great, tax-efficient, long-term investments, but not every ETF is a good long-term investment. For example, inverse and leveraged ETFs are designed to be held only for short periods. In general, the more passive and diversified an ETF is, the better candidate it will make for a long-term investment.
- #1 Fidelity Large Cap Growth Index Fund.
- #2 AB Large Cap Growth Fund.
- #3 VanEck Vectors Low Carbon Energy ETF.
- #4 Manor Investment Funds Growth Fund.
- #5 Invesco KBW Property & Casualty Insurance ETF.
If the ETF that's raising fees still offers reasonable value relative to competing ETFs, it might make sense to stay invested." On the other hand, if the fund's performance isn't keeping pace with rising fees, then it may be time to move on to another investment.
Large-growth funds invest in stocks of big U.S. companies that are projected to grow faster than other large-cap stocks. Stocks in the top 70% of the capitalization of the U.S. equity market are defined as large-cap.
How long should you hold an ETF? ›“As a rule of thumb, ETF investors should avoid the first and last 30 minutes of trading,” said Matt Hougan, CEO of Inside ETFs. You may want to try to outsmart the market volatility and limit your risk with a stop-loss order, which tells the broker to sell an ETF when it reaches a certain price.
The biggest difference between ETFs and index funds is that ETFs can be traded throughout the day like stocks, whereas index funds can be bought and sold only for the price set at the end of the trading day. For long-term investors, this issue isn't of much concern.
Do ETFs pay dividends? ›
ETFs are required to pay their investors any dividends they receive for shares that are held in the fund. They may pay in cash or in additional shares of the ETF. So, ETFs pay dividends, if any of the stocks held in the fund pay dividends.
Two of the most popular ETFs include index funds based on the Standard & Poor's 500 index and the Nasdaq 100 index, which contain high-quality businesses listed on American exchanges: Vanguard S&P 500 ETF (VOO), with an expense ratio of 0.03 percent. Invesco QQQ Trust (QQQ), with an expense ratio of 0.20 percent.
What are the best sectors to invest in 2022? ›Going into 2022, among the key market sectors to watch are oil, gold, autos, services, and housing. Other key areas of concern include tapering, interest rates, inflation, payment for order flow (PFOF), and antitrust.
For most personal investors, an optimal number of ETFs to hold would be 5 to 10 across asset classes, geographies, and other characteristics. Thereby allowing a certain degree of diversification while keeping things simple.
What should my first ETF be? ›Top large-cap ETFs
One way for beginner investors to get started is to buy ETFs that track broad market indexes, such as the S&P 500.
You expose your portfolio to much higher risk with sector ETFs, so you should use them sparingly, but investing 5% to 10% of your total portfolio assets may be appropriate.
Are ETFs good long term investments? ›ETFs can make great, tax-efficient, long-term investments, but not every ETF is a good long-term investment. For example, inverse and leveraged ETFs are designed to be held only for short periods. In general, the more passive and diversified an ETF is, the better candidate it will make for a long-term investment.
In case of ETFs in India, short term capital gains are taxed at the peak rate of tax for the investor concerned while long term capital gains are either taxed at 10% without indexation or at 20% with indexation benefits. ETFs in India, therefore, score lower in terms of returns as well as in terms of tax efficiency.
Which sector will boom in 2022? ›The consensus seems to be that the financial sector, industrial sector, capital goods will do well in 2022. Pharmaceuticals are also looking to make a mark, and a few experts have placed their bets on real estate and automobiles while others have advised against them.
- Healthcare and Insurance Sector. ...
- Renewable Energy Sector. ...
- IT Sector. ...
- Real Estate Sector. ...
- Fast Moving Consumer-Goods Sector (FMCG) ...
- Automobile Sector.
What is the safest investment with highest return? ›
- High-yield savings accounts.
- Series I savings bonds.
- Short-term certificates of deposit.
- Money market funds.
- Treasury bills, notes, bonds and TIPS.
- Corporate bonds.
- Dividend-paying stocks.
- Preferred stocks.
“As a rule of thumb, ETF investors should avoid the first and last 30 minutes of trading,” said Matt Hougan, CEO of Inside ETFs. You may want to try to outsmart the market volatility and limit your risk with a stop-loss order, which tells the broker to sell an ETF when it reaches a certain price.
Should you buy multiple ETFs? ›Owning five to six ETFs is a "great mix because having more makes it difficult to keep track of it," Brott said. "Three core holdings reflecting various concentrations of small medium and large cap U.S. stocks should make up 50% to 70% of the portfolio," he said.
The best time to buy ETFs is at regular intervals throughout your lifetime. ETFs are like savings accounts from back when savings accounts actually paid you interest. Think back to a time when you (or your parents!) used to invest in your future by putting money into a savings account.
How much of my portfolio should be ETFs? ›According to Vanguard, international ETFs should make up no more than 30% of your bond investments and 40% of your stock investments. Sector ETFs: If you'd prefer to narrow your exchange-traded fund investing strategy, sector ETFs let you focus on individual sectors or industries.
The three things you want to look for are the fund's liquidity; its bid/ask spread; and its tendency to trade in line with its true net asset value. An ETF's liquidity stems from two sources: the liquidity of the fund itself; and the liquidity of its underlying shares.