International exchange-traded funds (ETFs) can be a smart addition to any well-balanced portfolio. While U.S. stocks have outperformed over the past decade, that hasn’t always been the case. Savvy investors often keep some exposure to international ETFs to hedge against periods when domestic markets fall behind.
That’s exactly what happened in early 2025 when renewed tariff threats under a potential Trump administration caused U.S. stocks to stumble. In contrast, international markets -- especially in Europe -- held up better. You can also look back to the so-called “lost decade” from 1999 to 2009 when international stocks solidly outperformed U.S. equities.
You don’t need to buy individual foreign stocks, American Depositary Receipts (ADRs), or Global Depositary Receipts (GDRs), which can come with complexity and higher costs. International equity ETFs handle the heavy lifting for you and usually come with lower fees than the mutual funds many investors used in the past.
Here’s a look at some of the top international equity ETF picks available today.
The best international ETFs
The best international ETFs in 2025
What’s best will depend on your risk tolerance, time horizon, and investment goals -- but virtually all investors are well served by broad diversification, low fees, and tax efficiency. International ETFs come in all shapes and sizes.
You can get as specific as individual countries or even sectors within those countries with international ETFs, but most investors do well by spreading their bets across a few different regions. The following international ETFs offer solid exposure, strong liquidity, and reasonable costs, making them smart building blocks for global diversification.
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1. Vanguard Total International Stock ETF
The Vanguard Total International Stock ETF (VXUS 0.35%) is the “buy-it-all” option for international exposure. It tracks the FTSE Global All Cap ex-US Index, covering more than 8,600 stocks across small-, mid-, and large-cap companies from both developed and emerging markets. As the name suggests, it captures the other 40% of global equities that U.S.-focused indexes like the S&P 500 leave out.
This ETF has underperformed U.S. stocks over the past decade, with a 10-year annualized return of 5.22%, but past performance doesn’t predict the future. With a low 0.05% expense ratio, it has few structural headwinds for long-term investors looking for global diversification.
2. Vanguard FTSE All-World ex-US Small-Cap ETF
Most international ETFs are market cap-weighted, meaning larger companies make up a bigger portion of the fund. This provides stability but can limit growth potential since small-cap stocks tend to be riskier but offer higher expected returns over time. If you want to tilt toward international small caps, the Vanguard FTSE All-World ex-US Small-Cap ETF (VSS 0.86%) is a solid option.
It tracks the FTSE Global Small Cap ex-US index, holding more than 4,800 global small-cap stocks with a median market cap of $1.9 billion. You can expect more volatility compared to large-cap international ETFs, and performance has reflected that -- it has returned 4.43% annualized over the past 10 years. Still, it’s affordably priced with a 0.08% expense ratio.
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3. iShares Core MSCI EAFE ETF
You can break international markets down not just by country but also by classification -- developed or emerging. Developed markets typically have more mature economies, stable political systems, and well-regulated financial markets.
The iShares Core MSCI EAFE ETF (IEFA 0.23%) covers this segment by tracking the MSCI EAFE IMI Index, which holds more than 2,600 stocks from developed markets across Europe, Australasia, and the Far East -- hence the EAFE acronym. That includes countries like Japan, the United Kingdom, France, Germany, and Australia. This ETF has delivered a 10-year annualized return of 5.65% and charges a low expense ratio of 0.07%.
4. SPDR Portfolio Emerging Markets ETF
The counterpart to developed markets are emerging markets—countries with growing but less mature economies, often marked by faster GDP growth, less stable political systems, and less developed financial infrastructure. For exposure to this group, you can complement a fund like IEFA with the SPDR Portfolio Emerging Markets ETF (SPEM 0.39%), which tracks more than 3,000 holdings through the S&P® Emerging BMI index. This includes major emerging economies such as China, India, Brazil, South Africa, and Mexico.
Emerging markets have been the laggard over the past decade, with this ETF posting a 10-year annualized return of 4.47%. But that backward-looking performance shouldn't stop you from considering a forward-looking allocation -- just a 10% position in emerging markets can offer strong diversification benefits. It also keeps costs low with a 0.07% expense ratio.
5. Schwab International Dividend Equity ETF
One thing income investors will appreciate about international equities is their tendency to offer higher dividend yields compared to U.S. stocks. If you’re looking to diversify globally while collecting above-average payouts, The Schwab International Dividend Equity ETF (SCHY 0.44%) is worth a look. It tracks the Dow Jones International Dividend 100 index, which screens for companies with at least 10 consecutive years of dividend payments.
Then, the Schwab International Dividend Equity ETF applies a composite score based on free cash flow to total debt, return on equity, dividend yield, and five-year dividend growth rate. The result is a portfolio with a strong 4.68% 30-day SEC yield. It hasn’t been around long enough to show a 10-year track record, but its 0.08% expense ratio is highly competitive in the international dividend equity space.
Related investing topics
Should I invest?
Should I invest in international ETFs?
Diversifying internationally isn’t just about chasing higher returns -- it’s about minimizing regret. The goal is to have some international exposure so that when U.S. markets take a hit, you’re not forced to sell low and buy high. Having a portion of your portfolio invested globally means you won’t feel left out if and when international markets outperform.
Given how cheap international ETFs are today and how easy it is to invest in them, it costs very little to add them to your mix. Plus, about 40% of the global stock market is outside the U.S., so if your goal is to be passive and hands-off, holding international ETFs around that level of exposure can be a smart, balanced approach.
FAQ
International ETFs FAQ
How do I invest in international ETFs?
Just like with any stock or ETF, you can buy and sell international ETFs through your brokerage using the bid and ask prices during market hours.
How does an international ETF work?
International ETFs work like other ETFs by holding a basket of stocks -- in this case, from foreign markets -- and using the creation and redemption process to keep the ETF's price close to the value of its holdings.
Do international ETFs pay dividends?
Some do, but not all. It depends on the ETF's strategy and whether the underlying companies regularly distribute dividends.
Is an international ETF considered a foreign asset?
No. Even though the underlying stocks may be from outside the U.S., the ETF itself is U.S.-domiciled and not classified as a foreign asset.
