Methodology

The ETFs considered for this article were evaluated using several factors, including geographic coverage, developed- and emerging-market exposure, diversification, market-cap coverage, expense ratios, underlying indexes and the role each fund can play in a diversified portfolio.

The analysis emphasizes broad, passively managed international equity ETFs available to U.S. investors rather than narrowly focused country, sector or thematic funds.

Fund statistics cited in this article reflect information available from the fund sponsors as of September 2026 and can change over time. Investors should check the latest prospectus and fund information before making an investment decision.

Understanding international ETFs

What are International ETFs?

International ETFs are exchange-traded funds that invest primarily in securities issued by companies outside the United States. Investors can buy and sell ETF shares on a U.S. exchange during the trading day, just as they can with domestic ETFs.

The term "international ETF" can encompass several different strategies. Some funds invest broadly across developed and emerging markets outside the U.S., while others concentrate on a particular region, country or market segment.

Vanguard defines international ETFs as funds investing in foreign markets while excluding the United States, while global or world ETFs can include both U.S. and international stocks.

Related: Best ETFs to Buy Now

What are the Different Types of International ETFs?

International ETFs can be divided into several broad categories:

• Total international ETFs. These funds seek broad exposure to developed and emerging markets outside the United States.
• Developed-market ETFs. These funds invest primarily in established economies such as Japan, the United Kingdom, France, Germany, Switzerland and Australia.
• Emerging-market ETFs. These funds focus on countries generally classified as emerging markets, including markets such as India, China, Brazil and Taiwan.
• Regional ETFs. These funds concentrate on areas such as Europe, Asia-Pacific or Latin America.
• Country ETFs. These funds focus on a single foreign market.
• International sector ETFs. These funds target industries such as technology, financials or energy across international markets.
• International dividend ETFs. These funds emphasize companies outside the U.S. that meet particular dividend-related criteria.

Related: Best Dividend ETFs

Benefits of Buying International ETFs

International ETFs can provide several potential portfolio benefits:

• Geographic diversification. Investors gain exposure to economies and companies outside the U.S.
• Broad company exposure. A single ETF can provide exposure to hundreds or thousands of stocks.
• Access to foreign markets. Investors can participate in markets that may be difficult or costly to access individually.
• Different sector exposure. International indexes can have different industry weights than U.S. indexes.
• Potential income. Many international companies pay dividends, and broad international ETFs can distribute those payments to shareholders.
• Low-cost diversification. Large index ETFs can spread portfolio exposure across countries without requiring investors to purchase individual foreign stocks.

Risks of Buying International ETFs

International investing introduces risks that investors should understand before purchasing an ETF.

Currency risk is one of the most important. A foreign stock can rise in its local currency while the U.S. dollar strengthens enough against that currency to reduce the investment's return when translated back into dollars.

Political and regulatory risks can also be greater than those encountered in the U.S. Changes in taxation, government policy, trade relationships or foreign-investment rules can affect companies and markets.

Emerging markets can introduce additional risks related to market liquidity, economic development, political stability and financial-market infrastructure. Vanguard specifically warns that country, regional and currency risks are present in international investments and can be especially significant in emerging markets.

Are International ETFs Safe?

International ETFs are not risk-free investments. Broad diversification can reduce the impact of any single company or country, but it cannot eliminate the possibility of losses.

An international equity ETF can decline substantially during a global stock-market downturn. Currency movements, geopolitical events, recessions and changes in interest rates can also affect returns.

The level of risk varies by fund. A broad developed-market ETF generally has a different risk profile from a concentrated emerging-market or single-country ETF.

Do International ETFs Pay Dividends?

Yes. Many international ETFs distribute dividends received from the foreign companies in their portfolios. The amount and frequency of distributions depend on the fund and the dividends paid by its underlying holdings.

For example, Vanguard reported a dividend yield of 2.36% for VXUS as of July 31, 2026, while VEU's dividend yield was 2.35% on the same date.

Dividend yields can change as stock prices and company distributions change, so investors should not treat a fund's current yield as a guaranteed future return.

How Do International ETF Taxes Work?

U.S. investors generally owe taxes on taxable-account dividends and realized capital gains from international ETFs. International funds can also encounter foreign withholding taxes when their underlying companies pay dividends.

In some circumstances, a U.S. investor can receive a foreign tax credit for qualifying foreign taxes passed through by a regulated investment company. The IRS says that mutual fund shareholders may be able to claim a credit when the fund elects to pass qualifying foreign taxes through to shareholders, with the relevant information generally reported on Form 1099-DIV.

The foreign tax credit is subject to rules and limitations, including a limitation based on foreign-source income. Certain taxpayers with relatively small amounts of qualifying foreign taxes may qualify for an exception to the Form 1116 filing requirement.

Tax treatment can differ substantially between taxable brokerage accounts and retirement accounts. Foreign taxes paid inside a retirement account generally do not provide the account owner with the same direct foreign-tax-credit opportunity available in a taxable account. Investors should consult a tax professional regarding their particular situation.

Key Metrics to Consider before Buying International ETFs

Investors comparing international ETFs should consider more than recent performance. Important metrics include:

• Expense ratio. Lower expenses can reduce the drag on long-term returns, all else equal.
• Number of holdings. A larger number of holdings can provide broader diversification.
• Geographic exposure. Review the countries and regions represented in the fund.
• Developed-market exposure. Determine how much of the portfolio is invested in established foreign economies.
• Emerging-market exposure. Check whether the fund includes emerging markets and how large that allocation is.
• Market-cap exposure. Some funds include large-, mid- and small-cap companies, while others focus primarily on large and mid caps.
• Underlying index. Similar-sounding funds can track substantially different indexes.
• Dividend yield. This can be useful for investors seeking income but should not be viewed in isolation.
• Assets under management. Larger funds can sometimes offer greater trading liquidity, although investors should also examine bid-ask spreads.
• Tracking difference. Compare the ETF's performance with its benchmark to see how effectively it has tracked the underlying index.

Portfolio Allocation of International ETFs

International ETFs can be used in several ways within a diversified portfolio. Some investors use a single broad international ETF alongside a U.S. stock-market fund. Others divide their international allocation among developed and emerging markets.

There is no universally appropriate allocation because the right mix depends on an investor's time horizon, risk tolerance, investment objectives and other holdings.

How much of my portfolio should be in International ETFs?

There is no single allocation that applies to every investor. A portfolio's international allocation can depend on how much exposure the investor already receives through other funds and whether the goal is to approximate the global equity market.

Vanguard says it generally suggests international investments account for about 40% of the stock portion of a portfolio, although investors should consider their own circumstances rather than treating that figure as a universal rule.

One approach is to determine a target percentage for non-U.S. stocks and then rebalance periodically as market movements cause the allocation to drift.

Is the S&P 500 enough, or do I need International diversification?

The S&P 500 provides exposure to 500 large U.S. companies, but it does not provide direct exposure to companies headquartered outside the United States.

Investors who hold only an S&P 500 fund therefore have substantial exposure to the U.S. economy and U.S. corporate sector. Adding an international ETF can broaden geographic exposure.

Whether an investor needs that diversification depends on the rest of the portfolio and investment objectives. A total-world fund that already includes U.S. and foreign stocks is another way to obtain global exposure.

How to Choose International ETFs

Investors comparing international ETFs should start by identifying the type of exposure they want.

A total international fund such as VXUS or IXUS may be appropriate for investors seeking a broad developed- and emerging-market allocation. Investors who want developed markets without emerging markets may instead consider a fund such as SCHF.

Cost is another consideration. The four ETFs discussed here have expense ratios ranging from 0.03% for SCHF to 0.07% for IXUS based on current sponsor data.

Investors should also examine the underlying index, number of holdings, country weights, market-cap exposure and tax characteristics. Two ETFs can both be described as "international" while offering materially different portfolios.

How to Buy International ETFs

Buying an international ETF generally follows the same process as purchasing a U.S.-focused ETF:

1. Open a brokerage account. Choose a brokerage account that provides access to U.S.-listed ETFs.
2. Determine your allocation. Decide how much of your portfolio you want allocated to international stocks.
3. Research the ETF. Review its index, expense ratio, holdings, geographic exposure and historical tracking.
4. Choose an order type. Investors can generally use market or limit orders when purchasing ETFs.
5. Purchase shares. Enter the ETF ticker and the desired number of shares or dollar amount.
6. Monitor the allocation. Review the portfolio periodically and rebalance if the international allocation moves materially away from the target.

ETF shares trade at market prices, which can differ from the fund's net asset value. Investors should also consider bid-ask spreads and trading costs when purchasing or selling ETF shares.

Frequently Asked Questions about international ETFs

Is there a Fidelity equivalent to Vanguard's VXUS?

Fidelity does not offer an ETF that is an exact structural equivalent to VXUS, but Fidelity ZERO International Index Fund (FZILX) is a comparable broad international index fund.

FZILX seeks to track foreign developed and emerging stock markets and invests primarily in the Fidelity Global ex U.S. Index. Fidelity reported a 0.00% expense ratio as of Dec. 30, 2025. Unlike VXUS, however, FZILX is a mutual fund rather than an ETF.

Investors comparing the two should consider their account type, trading preferences, index methodology, holdings and tax considerations rather than focusing solely on expense ratios.

VXUS vs. VEA: Which is better?

VXUS and VEA provide different types of international exposure, so the comparison depends on the role an investor wants the fund to play.

VXUS covers developed and emerging markets outside the U.S. and follows the FTSE Global All Cap ex US Index. VEA, by contrast, tracks developed markets outside the U.S. and does not provide the same broad emerging-market exposure. Vanguard lists VEA as its FTSE Developed Markets ETF.

Investors seeking developed-market exposure alone may therefore have a different use for VEA than investors seeking a single fund covering developed and emerging markets.

What is the difference between VXUS and IXUS?

Both VXUS and IXUS are broad international equity ETFs that exclude U.S. stocks and include developed and emerging markets.

VXUS tracks the FTSE Global All Cap ex US Index and had more than 8,700 holdings as of July 31, 2026, while IXUS tracks the MSCI ACWI ex USA IMI Index and had 4,590 holdings as of Sept. 9, 2026.

The funds also have different expense ratios: VXUS was 0.05%, compared with 0.07% for IXUS based on current sponsor data.

Although the two funds have similar overall objectives, their indexes use different methodologies, so country, sector and market-cap weights can vary.

Should I hold International ETFs in a taxable account or a Roth IRA?

The answer depends on the investor's tax situation and overall asset-location strategy.

Holding an international ETF in a taxable brokerage account can allow an investor to potentially claim a foreign tax credit for qualifying foreign taxes passed through by the fund, subject to IRS rules and limitations.

In a Roth IRA, qualified withdrawals can generally be tax-free, but foreign taxes paid by investments inside the account do not generally create the same direct foreign tax credit for the account owner. As a result, the tax treatment of international ETFs can be an important factor when deciding which account to use.

Because tax rules can vary with individual circumstances, investors should consult a qualified tax adviser before making an account-location decision.

Do International ETFs include emerging markets?

Some do and some do not.

Total international ETFs such as VXUS, IXUS and VEU include both developed and emerging markets. Vanguard's data for VEU showed approximately 26% emerging-market exposure as of July 31, 2026.

SCHF is different because it tracks the FTSE Developed ex US Index and focuses on developed markets outside the United States.

Investors should therefore check the underlying index rather than assuming that every ETF described as "international" includes emerging-market stocks.