International investing has brought some stellar returns. While there are many exchange-traded funds (ETFs) that home in on particular countries, funds that have a whole-world approach are generally better for average investors.

The Vanguard Europe Pacific ETF (AMEX: VEA) is well-suited to investors who want to diversify internationally, providing exposure to companies in Pacific Rim nations and in Europe -- two regions with stronger economic growth than the U.S. over the past few years.

Fund facts

  • Fund began: July 20, 2007
  • Expense ratio: 0.15%
  • Net assets: $509 million

The fund tries to match the performance of the MSCI EAFE Index, one of the most popular international indexes. The MSCI EAFE Index, which is dominated by large-cap stocks, is market value-weighted and includes companies from Europe, Australia, and Asia.

The fund owns more than 1,100 stocks in 22 countries, with a roughly 70/30 split between Europe and the Pacific Rim. The United Kingdom and Japan have the top country weights at 22% and 20%, respectively, with France coming in a distant third. The top three companies are BP (NYSE: BP), HSBC Holdings (NYSE: HBC), and Vodafone (NYSE: VOD).

Will the world avoid recession?
One reason to diversify into international stocks is to take advantage of different economic conditions. Yet increasing globalization has made economies more interrelated, making the prospect of a global recession more likely.

The European Commission has estimated that a higher euro, along with increased costs for energy and food, will contribute to a slowing of that economic bloc. However, a strong global economy and rapid growth in Asia have helped bolster the economic picture.

Looking to the East, the International Monetary Fund expects economic growth in emerging markets like China, India, and Russia to make up for a weak outlook in the U.S. However, turmoil in the credit markets and a U.S. housing slump are wild cards that may yet cause a worldwide economic slump.

Portfolio fit?
Like most Vanguard offerings, the Europe Pacific ETF has a low expense ratio -- less than half the level of competitor iShares MSCI EAFE (NYSE: EFA), and a third of WisdomTree DEFA Fund (NYSE: DWM). Investors looking to expand their horizons with large-cap international stocks might want to allocate a portion of their portfolio to this broadly diversified fund.

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Fool contributor Zoe Van Schyndel lives in Miami and enjoys the sunshine and variety of the Magic City. She does not own any of the funds or securities mentioned in this article. The Motley Fool has a disclosure policy.