7 Best International ETFs of 2022 (No Bonds!)
International ETFs are a great way to invest in the world’s most promising markets — they generally make decent standalone investments but are best used to diversify your portfolio and manage geopolitical risks you may be exposed to in your personal life.
We’re big fans of international investing and alternative investing, so we’re quite passionate about this topic — because of this we’ll be going into quite a bit of detail below beyond just including what International ETFs are on the market.
We’ll be going in detail on what to look for in international ETFs, how they fit in various types of portfolios and strategies, how we personally integrate them into our portfolios here at Greenery Financial, and yes, we’ll share many international ETFs that are good fits for many investors in our opinion.
If you are experienced feel free to skip ahead by clicking here to the ETFs we’ve chosen as the best of 2022, however if you aren’t familiar with international investing we’d recommend you read the basics & buyers guide down below to get a good introduction and feel for the topic and understand how to implement international ETFs into your portfolio in a reasonable and safe manor.
Table Of Contents
International ETF Basics & Buyer's Guide:
The idea of investing in an international ETF might sound promising, but before you get started, it’s important to know how to find the best international ETF for your financial position and understand how they fit into one’s portfolio.
Depending on how much money you’re prepared to invest and how much risk you’re willing to take, as well as a multitude of other factors the ideal ETF for someone else might be the wrong move for you — for example if you live in Thailand or like visiting it often investing in a Thai ETF like $THD may be a good choice, but for someone who prefers visiting or living in Brazil it may not be a particular good investment, as the purpose of such an investment is not always for maximum returns, but rather reducing your personal risks.
Below we’ll go into things to consider before investing in an International ETF and what to look for, before getting into what we do and why, followed by the best International ETFs in our opinion for most people — such ETFs will be ones that make a good addition to most portfolios in our opinion.
Fees, Expense Ratios
While the returns on an international ETF might sound promising on paper, you should weigh up the returns alongside the fees and expense ratios for the ETF you’re considering investing in, as well as consider the FX (Foreign Currency Exchange) changes during the period you’re measuring in the past.
In general, anything over 1.5% is considered a high expense ratio when it comes to international ETFs, meaning that you, as an investor, are paying significant fees for fund management. Expense ratios under 1%, and especially under 0.5%, are considered low-cost investments — these are generally what you can expect from most foreign ETFs. Keep in mind country-specific or frontier markets are harder to invest in, and have more fees, which is why the International ETFs you’ll encounter often charge much more than traditional US-focused or Developed-Country focused ETFs.
For mutual funds (non-ETFs) expense ratios and fees may creep up a bit higher than 1.5% if you’re investing in frontier markets like Africa through the African Lions Fund (a personal favorite of mine) you’ll be looking at something around 1.5% in fees per year plus a performance (above benchmark) fee, or in some cases quite a bit higher (2% to 4% per year) in management fees. We personally choose to not invest in any funds with management fees higher than 2%.
Foreign Currency (FX) Changes
Beyond the Fees & Expense Ratios, covered above, you also NEED to consider the FX changes of an ETF — if the country has high exposure to Brazil, for example the EWZ ETF, and the Brazilian Rial (their currency) depreciates against the dollar, like it did in the last few years, despite economic growth your investment would be down in relation to dollars.
This doesn’t mean the ETF performed poorly, or that it was a bad investment, but rather than it’s cheaper today for someone with dollars than it was a few years ago. If you were living in Brazil, and had expenses in Rial, you’d be happy with the investment. This is why it’s critical to use international ETFs for diversification and do so intentionally depending on your situation.
One of the benefits of investing in an ETF is that the performance of ETFs can be monitored through regularly-published and transparent performance reports. You should definitely take advantage of this and look at the latest performance report for an EFT before investing. You will need to take into account short-term (recent) performance as well as the fund’s performance over the past years.
It’s less important to verify these things yourself if the fund is an actual ETF and not a mutual fund, however we’d say it’s still worth looking into what they’ve added/sold over the history of the fund and see if they’re pivoting the fund in a way that you may not be okay with — such as in a pacific-focused ETF buying heavily into China while selling more Japanese companies when you do not want more China exposure.
Assets Under Management
An ETF’s AUM (Assets Under Management) is a good way of assessing the longevity of a fund — generally it’s something that doesn’t matter at all in non-international ETFs as none of them will close down — but that’s a very real possibility when investing in international ETFs.
It’s not uncommon for smaller ETFs to shut down and liquidate their holdings, distributing you the cash/proceeds, if they aren’t making enough to keep the fund alive or if they simply feel the geopolitical risk is too great. If they close the fund you won’t lose your funds, as ETFs can’t really go bankrupt, however you’ll be left with a taxable event and lose your exposure to the market the fund invested in if they close down.
We’d say it’s best to stick to funds with a minimum of 50 million USD worth of AUM/NAV, and if you’re particularly trying to avoid unforeseen taxable events you may want to aim a bit higher (200 million AUM/NAV+). Below that and funds seem to struggle to stay in operation long-term.
Holdings & Positions
Obviously It’s also worth taking a look at an ETF’s top holdings, which the fund is legally required to publish to the public. By looking at an ETF’s holdings, you can get a sense of the types of securities that the fund invests in — sure it may be a Asia-oriented ETF but it may invest 70% of it’s assets in Japan or Mainland China and give you no exposure at all to the developing and semi-developed areas of Asia, such as Vietnam, Cambodia, Thailand, and the Philippines.
The ETF in question may also have a ridiculously high exposure in Singapore, however they’re one of the biggest and best places to be publicly traded in Asia so many of the companies listed there, and appearing as being Singapore-based, do not in practice do business in Singapore, but rather have most of their revenue coming from other countries in Asia.
Another thing to consider is what sector they’re in — if they’re in the financial sector while they technically are Asia-domiciled and routed in Asia doing well, they’ll also suffer greatly if the US or Europe has a recession as banks are highly correlated with each other. Because of this it may be worth looking for funds with more exposure to consumer goods and staples, construction/concrete, etc.
How do we Approach International ETF Investing?
Our strategies can change at any time depending on market conditions, but our general strategy with investing in international ETFs is two-pronged.
The first prong being to ground our portfolio and the income it generates to where our expenses originate from — currently Thailand is where most of our living expenses originate from, so as a result this prong of our international ETF portfolio goes into investing Thailand and SEA — this means $THD, $VNM and $EWM. This gives us a nice base and we don’t freak out over currency fluctuations locally, as if the currency appreciates so will our investments, and if it depreciates then our costs of living decrease so the likely losses (in USD) of the investments in these countries aren’t really anything to sweat over. It provides balance.
The second prong is where we selectively invest in emerging markets and frontier markets that we’ve been to and have some on-the-ground knowledge of the situation and who are suffering currency-wise against the dollar. One example of this would be investing in Colombia in 2020 as their currency dropped by around 20% against the dollar, and then their economy began to suffer greatly due to lockdowns combined with oil prices being low – all these factors culminated in $ICOL, the Colombian ETF, taking a 50%+ nosedive in just a few months.
A perfect buying opportunity in our view, as Colombia wasn’t fundamentally collapsing or in chaos, but rather certain macro conditions combined culminated in the peso dropping relative to dollars and major holdings of the ETF, energy companies and utilities in the country, dropping substantially.
Those are the two ways we approach international ETF investing — one for hedging our lifestyle and living expenses, and to a lesser extent where we like to vacation, and then also to take advantage of currency fluctuations in emerging markets.
Why No International Bond ETFs?
We do not consider Bond ETFs to be investible products nor do we believe they have any place in foreigners portfolios. If you do not live in the domestic market there’s no way you’ll be competent enough to understand the bond market in the country and you’ll lack real economic exposure and diversification to the country in question when using Bond ETFs vs Equity ETFs.
If you’ll be retiring in a foreign country very soon you may want to consider international bond ETFs, but otherwise it’s just exposing yourself to foreign currency risk with little real upside or diversification benefits in our view, and thus we won’t even cover them in such a list as this. Sorry if you like bonds, but they’re not for us.
The Best International ETFs Of 2022
Below we’ll cover our top picks that are worth considering in our opinion for just about everyone — they make a general good addition to most portfolios by providing general currency diversification and exposure to emerging countries, while not carrying a large amount of currency risk or geopolitical risk to any one country or currency in a region. We aren’t investing in all these ETFs ourselves, but some of them we do invest in as we think they make a good addition to our portfolio as well.
As mentioned above these should be a baseline, a starter, not the be-all end-all of international ETF investing. There’s so many specific countries you may want to invest in depending on your situation and perception on the world and the future of the world economy.
SPEU: SPDR Portfolio Europe ETF
SPDR Portfolio Europe ETF (SPEU) has almost everything a new investor in international ETFs could want in an ETF investment — it’s a region-specific ETF with a focus on equities in Europe. SPEU has investments in over 1,400 European companies across Europe, including both the United Kingdom and EU/Eurozone Countries.
This is a low-cost international ETF with management fees of just 0.09% per year as it’s a fund that invests in large-cap companies in developed markets and has a quite healthy AUM of $250,000,000+ (250million) meaning they can collect enough revenue even with such low fees to continue operations and profit.
The best way to think of this ETF is as the S&P 500 of Europe or Dividend-Aristocrats ETF of Europe — it invests in the best companies in every country, including many multinational corporations like Nestle, AstraZeneca, and Shell — covering all industries and all western European Countries, and not being too tech heavy or overweighted in any one particular industry or country.
Pros of SPEU:
- 0.09% management fees – Low-cost
- 3-4%+ Dividend Yields on Average – Good Yield
- 250 million AUM/NAV – Unlikely to be closed down
- Europe-Exclusive Holdings – Good Diversification and European Exposure
Cons of SPEU:
- Low Growth – Lacks traditionally high-growth tech holdings
- Entirely Europe-Based – High Exposure to Euro price movements
EWT: iShares MSCI Taiwan
EWT, also known as iShares MSCI Taiwan, is the optimal investment for investors seeking shares in mid-size and large-size Taiwanese companies as well as exposure to the stock market in Taiwan. Boasting over 4 billion in AUM and over 90 holdings in the ETF it’s not only not going anywhere but it’s well diversified.
It’s the best way to get exposure to Taiwan charging a standard asia-fosuced ETF fee of 0.57% annually and having the majority of the fund in stocks that otherwise are difficult to invest in (don’t have ADR’s), however, some investors may be put off investing in EWT because they only pay distributions on an annual basis. Many investors prefer bi-annual, quarterly, or even monthly distributions because more regular payments can make for higher returns and easier budgeting.
There are issues with EWT though — it has a high exposure to semiconductors, as semiconductors are one of Taiwans biggest industries and exports, so if this area of the global economy weakens then so will Taiwans economy and thus this ETF.
EWT also is, being right next to mainland china and disputed territory, has a much larger than average geopolitical risk element — while Taiwan is very safe, has a stable government, and is a flourishing democracy, they are next to Mainland China, Communist China, and at any time conflict could break out between the mainland and Taiwan, and if that happens obviously EWT investors, along with all of Taiwan, would suffer greatly.
With that being said Taiwan is one of the most efficient, growing, flourishing places in Asia, as well as the whole world, and if you can stomach that geopolitical risk they’re definitely a place to consider investing in — personally we lived in Taiwan for over half a year and believe in it’s future.
Pros of EWT:
- $4 billion+ AUM – Unlikely to Close Down
- 0.57% Expense Ratio/Fees – Quite Standard to Low fee for an Asia-focused ETF
- 3-4%~ Yield on Average – Healthy Yields in a developed healthy society
- Extremely Healthy Society & Stable Government – Fantastic Investment environment, minus geopolitical risks
- 80% of Holdings Otherwise Hard to Invest in – Provides Good Diversification With Ease
Cons of EWT:
- Distributions are paid annually – Some investors prefer quarterly dividends
- High Single-Industry Exposure – Is hugely reliant on semiconductor performance
- High Geopolitical Risk – Moderate Additional Risk due to Mainland China Aggression
IXUS: iShares Core MSCI Total International Stock ETF
iShares Core MSCI Total International Stock ETF is widely considered to be the best international ETF to invest in — and is mentioned by just about everyone who discusses International ETFs — we won’t break this trend so we’ll be mentioning it as well.
This fund offers affordable access to stocks outside the United States, with over 4000 holdings comprising a wide range of companies from all over the world — this is the perfect ETF for diversifying your portfolio internationally if you just want a ‘one and done’ solution and have no clue about other countries, never lived abroad, and/or simply are the type of person who likes a simple portfolio that’s predominantly SPY — well this is basically the SPY of the whole world, all the best non-US companies wrapped into one ETF.
IXUS charges a low annual fee of just 0.07%, this is basically as low as international ETFs can get, so it’s a good expense ratio and will save you money verses picking lots of country specific funds. Keep in mind IXUS is basically the same as VXUS, so if for some reason you prefer Vanguard to iShares VXUS is just as good.
Keep in mind this ETF, while it’s supposed to be an ‘excluding-USA’ International ETF they do not invest in all foreign markets, but rather just developed easy to access markets — this in practice means generally investing in developed markets like Japan, South Korea, Western Europe, and a few other countries. This means if you want exposure to a country that’s more ‘developing’ like Vietnam or a region such as Africa you’d likely want to add a country or region specific ETF for those — however IXUS (and VXUS) are a fantastic base to start gaining exposure to international markets and reduce portfolio risk over the long-term.
Pros of IXUS:
- $25 billion+ AUM – No real chance of closing down
- 0.07% Expense Ratio/Fees – Lowest Cost International Exposure
- 3-4%~ Yield on Average – Decent Dividend Yields
- Extremely Diversified – 4000+ Companies in the fund, <20% exposure to any single industry, across 20+ countries/markets
- Low Margin Requirements, high options volume – If you have portfolio margin or engage in trading this ETF is especially liquid
Cons of IXUS:
- Lacks Direction/Focus – As it’s a general ETF you don’t get region-specific exposure
- Dividends Every Other Quarter – Less Frequent Dividend Payouts
- Doesn’t Give Exposure to Emerging/Frontier Markets – Not an all-in-one solution for everyone
AFK: VanEck Vectors Africa Index ETF
AFK is the biggest and longest lasting publicly traded ETF in Africa, and they track the overall economy of Northern Africa relatively well, however despite the funds name being ‘Africa index’ they do not have substantial investments in the more ‘frontier markets’ of Africa, such as central Africa, and instead focus predominantly on Northern Africa and South Africa where capital markets are easier to access.
If you are more interested in frontier market exposure in Africa, to places like Kenya, Rwanda, Tanzania, Nigeria, etc, then you’ll have to invest in a private fund like the African Lions Fund which we’ve heard many good things about, which invests in those more frontier, developing, African economies rather than Northern and Southern African markets that are already developed to some degree.
AFK has the lowest expense ratio/fees of any fund that offers high exposure to Africa, at just 0.77% per year, and they offer a whopping 5%+ yield on average, however the fund’s size remains relatively small at only around 50 million and thus could potentially be shut down in a downturn, or have management fees increase, so that’s something to keep in mind with this fund.
Pros of AFK:
- 0.77% Expense Ratio/Fees – Low-cost African Exposure
- 5%~ Yield on Average – Good Dividend Yields
- Africa-Focused Holdings – Provides Diversification not available in really any other ETFs
Cons of AFK:
- $50 million AUM – Risk of Shutting Down in a Recession
- Geopolitical Risk – Many countries with large holdings, such as South Africa, have outsized political Risks
- Doesn’t Cover all of Africa – Having only 100 holdings they lack exposure to many frontier African markets
- Low Volume – Due to fund size + activity there’s no real market for options and trading in and out requires patience
VPL: Vanguard FTSE Pacific ETF
VPL (Vanguard FTSE Pacific ETF) is an international ETF that is passively managed and highly diversified, with a stock portfolio of around 2500 different companies spanning countries such as New Zealand, Singapore, Japan, Hong Kong, and Australia — developed pacific markets essentially.
The expense ratio is a very low 0.08%, which is the lowest you can find for Asia-focused ETFs, however keep in mind this is because they focus primarily on developed low-cost countries to invest in, such as Japan, South Korea, Australia, etc, and thus you won’t have high exposure to more emerging high-growth countries or companies in smaller Asian/Pacific countries like the Philippines, Vietnam, or Thailand.
This fund is perfect is you don’t want to get invest in all developed markets through a fund like IXUS but really just believe in Asia’s future — or prefer to gain exposure to Asia broadly while be more selective about your investments in Europe — there’s lots of reasons to choose a fund like VPL, and ultimately it’s only real downside is a lack of emerging market exposure in the pacific region — as they stick to more developed markets. The fund has moderate commodity exposure, which helps during inflationary times in the world economy.
- 0.08% Expense Ratio/Fees – Extremely Low fee for an Asia-focused ETF
- 3-4%~ Yield on Average – Healthy Yields in a developed healthy society
- Politically Stable Investments – Most countries/assets are in countries with good social cohesion
- 95%+ of Holdings Otherwise Hard to Invest in – Provides Good Diversification With Ease
- $50 million AUM – Could potentially close down in a recession
- Lacks Emerging Asia-Pacific Exposure — You’ll need to look elsewhere for SEA exposure.
GNR: SPDR S&P Global Natural Resources ETF
This one may be a bit of a shocker — as it’s not country or region specific, but rather commodity-focused. We’ve decided to include it as while we think it’s a good internationally exposed ETF, at a reasonable cost, it’s also one especially relevant in these inflationary times and makes a perfect example to demonstrate the benefits of commodities and to teach a lesson — namely that with commodity producers they’re always internationally-focused as the goods can be sold to (nearly) anywhere in the world, meaning they have exposure to the entire world’s economy and purchasing power.
GNR invests in commodity producers around the world, from fertiliser companies, gas companies, oil companies, including US companies and international companies, however due to the nature of the businesses the geographic location of them doesn’t materially impact operations or the diversification benefits the commodity-producer strategy brings to a portfolio — namely being inflation-proof.
The fund yields a healthy 4-5% per year generally, paid out twice per year, and has a relatively low fee at 0.4% annually — overall it’s a great fund to get yield, diversify, and protect a portfolio from inflation if you aren’t already exposed to commodities (precious metals, oil/energy, fertilisers and food, etc).
Pros of GNR:
- $2 billion+ AUM – Unlikely to be closed as a fund anytime soon (if ever)
- 0.40% Expense Ratio/Fees – lower fees than any other commodity-producer ETF we’ve found
- 4%+ Yield on Average – Very high Yields due to commodity-producers redistributing the majority of profits annually
Cons of GNR:
- Low Growth – Commodity-Producers generally grow with inflation and churn out good dividends, not growth.
- Overlap Risk – Many companies in this fund are likely present in other funds you invest in if you have a diversified portfolio
EWZ: iShares MSCI Brazil Capped ETF
Brazil-focused EWZ ETF by iShares is one of the most heavily traded ETFs on the market with lots of options volume if that interests you. They have around 4 to 5 billion AUM and thus aren’t going anywhere, and a relatively OK expense ratio of 0.57% per year. EWZ generally offers a quite high dividend yield of around 4% to 6%, but in recent years this has went up drastically to 10%+ due to many companies in Brazil having special dividends.
EWZ is a great ETF to get exposure to a developing, relatively stable, massive South American economy — however they do have some internal political and social issues similar to the USA, with lots of division and conflict which could present issues in the future.
Despite that Brazil our favourite country to invest in on the South American continent as while it has some issues the market is generally priced quite cheap for the quality you’re getting, and it’s the most stable with few revolutions or truly violent protests that have taken place in much of South America lately. They produce lots of food, oil, and have a healthy financial sector in Brazil, and while there’s division in the country and politics it’s much safer for capital than much of south America.
Pros of EWZ:
- $4.5 billion+ AUM – Unlikely to ever close down
- 0.57% Expense Ratio/Fees – Quite Standard for a South American Country-Specific ETF
- 5%+ Yield on Average – Very high Yields, often much higher than 5%
- High Volume & Options Availability – If you like trading or options hedging EWZ has the liquidity to support it
Cons of EWZ:
- Brazil has some Internal Issues – Stability is not as high as Asian Countries, political and social issues.
- Very Volatile – It’s quite common for the Brazillian market to go up or down by large amounts annually.
- Low Diversification – Most companies in Brazil aren’t publicly traded so the exposure in the fund is quite limited
Final Thoughts & Conclusions:
Investing in an international ETF is the perfect way to diversify your investment portfolio, hedge against domestic inflation, and generally preserve purchasing power and wealth over the long-term and is an essential piece in every portfolio as it matures and grows in size.
As mentioned above in the guide section at the start of this article not every international market needs to be invested in, nor do you need to invest in the entire market — you can choose to invest in portions of the world you believe in our the global market as a whole depending on your assumption on the future and what you’re trying to hedge, protect against, or achieve in the long-term.
If you have any considerations you’re not sure about you can contact us through out contact page and we can give our thoughts on the matter — however generally international investing, if done through ETFs, is quite simple and manageable for individual investors on their own. It only begins to get very complicated when you want specific industry exposure in certain countries, such as real estate in India, and need to invest in individual stocks in foreign markets.
International ETF FAQ's Answered:
Below we’ll go over the FAQ’s we’ve been asked, or encountered, or even had asked ourselves about International ETF Investing — If you have other questions feel free to contact us and we’ll get back to you as soon as we can — and likely even add our answer down below.
What are International ETFs?
ETF stands for ‘exchange-traded fund’. As the name implies, this is a type of fund that is traded on exchanges — The fund invests in what is called a basket of stocks (although other assets can also be involved) and is then traded on a stock exchange. ETFs are appealing to investors because they are associated with sizable stock indexes and are less expensive than other types of funds, such as mutual funds.
They are easy to access and liquidate, they make diversification easier, and they can easily be monitored through transparent performance reports.
International ETFs, specifically, offer exposure to countries that have been under-represented on Wallstreet — They provide access to emerging market economies with strong growth potential. Sometimes they strongly outperform domestic markets, other times they drastically underperform — but generally they are good for diversifying a portfolio and preventing you from having all your eggs (investments) in one basket (country).
Does Investing in International ETFs have Tax Consequences?
If you’re US-domiciled (resident/citizen) generally there are no extra tax consequences of investing in international ETFs assuming they’re traded on US stock exchanges like the NYSE — the ETF providers handle all the required tax payments and paperwork on your behalf generally in these funds. Of course it can vary depending on where you live and what you invest in, so consulting a tax professional near you is likely worthwhile if you are going to be investing large sums.