Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you'd like to add some foreign stocks to your portfolio but don't have the time or expertise to hand-pick a few, the Vanguard FTSE All-World Ex-US ETF (VEU -0.40%) could save you a lot of trouble. Instead of trying to figure out which foreign stocks will perform best, you can use this ETF to invest in lots of them simultaneously. It covers the whole world, excluding U.S. stocks.

The basics
ETFs often sport lower expense ratios than their mutual fund cousins. This ETF sports a very low expense ratio -- an annual fee -- of 0.15%.

This foreign stocks ETF has roughly kept pace with its benchmark over the past three and five years. As with most investments, of course, we can't expect outstanding performances in every quarter or year. Investors with conviction need to wait for their holdings to deliver.

Why foreign stocks?
It's quite valuable to have some foreign stocks in your portfolio for diversification. That way, if the U.S. market tanks, some of your other holdings might bolster the portfolio and offset the losses. Further, foreign economies grow at different rates, so foreign stocks can boost your overall performance sometimes, too. Emerging markets, for example, can grow rapidly.

More than a handful of foreign stocks had strong performances over the past year. Spain-based Banco Santander (SAN -0.21%), for example, popped 53% and currently yields 6.6%. It offers geographic diversification, with substantial operations in faster-growing Latin America and South America. Spain's gradual economic recovery also bodes well for Santander. Bulls like that the bank is focused on traditional retail banking as opposed to higher-risk businesses such as investment banking. Its CEO proclaimed last year, "After several years of high levels of write-offs and reinforcement of capital, Banco Santander is preparing for a new period of increased profitability."

Switzerland-based pharmaceutical giant Novartis AG (NVS 0.95%) jumped 46% over the past 12 months and yields 3.3%. Suffering from patent expirations for its successful formulations, as all drugmakers do, it has been investing in research and development. In recent news, its meningitis B vaccine Bexsero received a breakthrough therapy designation from the FDA, and a drug to treat chronic heart failure has done well in late-stage trials. There has been talk that Novartis might split up some of its businesses, too.

Other foreign stocks didn't do quite so well over the last year but could see their fortunes change years to come. U.K.-based telecom titan Vodafone Group (VOD -0.12%) gained 26%. Its shareholders have approved the sale of its remaining stake in Verizon Wireless to Verizon for $130 billion. Vodafone is poised to profit from Europe's rebounding economy, and it's making further investments in Europe and elsewhere, such as India. Some wonder whether it's spending too much on acquisitions, while many others speculate that the company will be acquired.

U.K.-based oil titan BP p.l.c. (BP -0.94%) tacked on 22% and recently yielded 4.8% while sporting a forward-looking P/E ratio of just 3.5. Don't leap without looking, though, as BP's fourth quarter featured revenue slipping and net income down 30% from year-ago levels, due in part to weak refining margins, its divestment program, and Deepwater-spill-related costs. BP has sold many assets to generate needed funds, but bears worry about its ultimate spill-related costs, which remain unknown. They also note that by shedding assets, it's also shedding some growth potential. On the plus side, BP has a promising project portfolio, and bulls like its strong reserve-replacement ratios and how it has been shrinking its debt and rewarding shareholders.

The big picture
If you're interested in adding some foreign stocks to your portfolio, consider doing so via an ETF. A well-chosen ETF can grant you instant diversification across any industry or group of companies -- and make investing in and profiting from it that much easier.