Best International ETFs for Global Diversification
Own 7,000+ companies outside the U.S. with a single fund. Here are the best international ETFs and how much to allocate.
Don't have time? Here's what you need to know:
- 1VXUS is the most popular single-fund solution for total international exposure (0.07%)
- 220-40% international allocation provides meaningful diversification against U.S.-only risk
- 3International stocks outperformed U.S. stocks for the entire 2000-2009 decade
- 4VT (Total World Stock) is the simplest way to get U.S. + international in one purchase
Why Your Portfolio Needs International Exposure
The U.S. stock market is about 60% of global market cap. That means 40% of the world's publicly traded companies are outside the U.S. — and some decades, they outperform. From 2000 to 2009, international stocks returned about 30% while U.S. stocks returned -9%. From 2010 to 2023, the U.S. dominated. No one knows which decade comes next.
Adding 20-30% international exposure to a U.S.-heavy portfolio reduces the risk of being fully dependent on one country's economy. If the U.S. enters a prolonged slump (as happened in the 2000s), international holdings cushion the blow.
Top International ETFs Compared
VXUS is the default recommendation because it covers both developed markets (Europe, Japan, Australia) and emerging markets (China, India, Brazil) in one fund. If you want to split developed and emerging for more control, pair VEA + VWO. IXUS is the iShares equivalent of VXUS with similar coverage.
| ETF | Coverage | Expense Ratio | Holdings | Includes Emerging Markets |
|---|---|---|---|---|
| VXUS | Total international (developed + emerging) | 0.07% | 7,000+ | Yes (~25%) |
| IXUS | Total international (iShares) | 0.07% | 4,300+ | Yes (~25%) |
| VEA | Developed markets only | 0.05% | 4,000+ | No |
| VWO | Emerging markets only | 0.08% | 5,000+ | Yes (100%) |
| SWISX | International (Schwab) | 0.06% | 1,500+ | No |
How Much International to Hold
Financial advisors typically recommend 20-40% international for a globally diversified portfolio. Vanguard's own target-date funds hold about 40% international. Jack Bogle himself suggested 0% (he was U.S.-only) while most of his successors at Vanguard recommend 30-40%. There is no single correct answer.
A practical rule: start with 20% international and adjust based on your comfort level. If you believe strongly in global diversification, go 40%. If you prefer U.S.-focused simplicity, stay at 20%. Anywhere in that range has worked historically.
Tip: If managing a separate international fund feels like too much, use VT (Total World Stock) instead. It holds U.S. and international stocks in one fund at market-cap weights — about 60% U.S. and 40% international — for 0.07%.
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Frequently Asked Questions
Is VXUS better than VEA?
VXUS is broader — it includes emerging markets (China, India, Brazil) while VEA covers only developed countries (Europe, Japan, Australia). If you want one fund for all international exposure, VXUS is the better choice. If you want to control your emerging market allocation separately, use VEA + VWO.
Should I worry about currency risk with international ETFs?
VXUS is unhedged, so currency fluctuations affect your returns in dollar terms. When the dollar strengthens, international returns look worse (and vice versa). Over 20+ year periods, currency effects tend to even out. Most long-term investors do not hedge currency.
Why have international stocks underperformed the U.S. recently?
U.S. tech giants (Apple, Microsoft, Google, Amazon) drove most of the market's gains from 2010-2023. International markets have fewer tech mega-caps and more banks, energy, and consumer companies. This trend could reverse — it has before — which is exactly why diversification matters.
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Alex Harrington
CFA Level II Candidate, Finance & Economics
Alex Harrington is an independent ETF researcher and personal finance writer with over 8 years of experience analyzing exchange-traded funds. A CFA Level II candidate with a background in economics, Alex has reviewed 800+ ETFs and helped thousands of beginners build their first investment portfolios through clear, jargon-free education.
This content is for educational purposes only and does not constitute financial advice. Past performance does not guarantee future results. Consult a licensed financial advisor before making investment decisions.