ETFs for international investing
Investing in international markets can be a great way to diversify your portfolio and potentially increase returns. However, investing in foreign stocks can be quite complex and may require significant research and expertise. One way to simplify the process is by investing in exchange-traded funds (ETFs) that focus on international markets.
ETFs are investment funds that trade like stocks on an exchange. They offer several advantages over traditional mutual funds, such as lower fees, better tax efficiency, and the ability to trade throughout the day. Additionally, ETFs can provide exposure to a diversified portfolio of stocks, bonds, or other assets that can help reduce risk.
There are several ETFs that focus on international investing. These funds invest primarily in stocks or bonds issued by companies or governments located outside of the United States. Here are some of the most popular international ETFs:
1. iShares MSCI EAFE ETF (EFA)
This ETF tracks the performance of large and mid-cap stocks in developed markets outside of North America, including Europe, Asia, and Australia. The ETF holds over 900 stocks and has a low expense ratio of 0.32%. EFA has a long-term track record of providing steady returns and is an excellent way to gain exposure to developed international markets.
2. Vanguard Total International Stock ETF (VXUS)
This ETF is a broad-based fund that invests in stocks of companies located in developed and emerging markets outside of the U.S. The fund holds over 7,500 stocks and has a low expense ratio of 0.08%. VXUS is an excellent choice for investors looking for a low-cost, diversified fund that invests in both developed and emerging markets.
3. iShares MSCI Emerging Markets ETF (EEM)
This ETF tracks the performance of large and mid-cap stocks in emerging markets, such as China, India, Brazil, and Russia. The ETF holds over 1,300 stocks and has a low expense ratio of 0.68%. EEM is a good choice for investors who want to gain exposure to the high-growth potential of emerging markets.
4. iShares Global Infrastructure ETF (IGF)
This ETF invests in companies that own or operate infrastructure assets, such as utilities, airports, and toll roads, located around the world. These types of companies tend to have stable cash flows and offer the potential for long-term growth. The fund holds over 200 stocks and has an expense ratio of 0.46%.
5. iShares JP Morgan USD Emerging Markets Bond ETF (EMB)
This ETF invests in U.S. dollar-denominated bonds issued by governments and companies located in emerging market countries. The fund holds over 400 bonds and has a yield of over 4%. EMB is a good choice for investors who want exposure to emerging market debt, which can provide higher yields than developed market bonds.
When investing in international ETFs, it's important to consider the risks associated with foreign investments. These risks include currency risk, political risk, and economic risk. Additionally, international ETFs may be subject to different tax rules than U.S.-based investments, which could affect your returns.
It's also important to consider your investment goals and time horizon when selecting international ETFs. Do you want exposure to developed or emerging markets? Are you looking for income or growth? How long are you willing to hold the investment?
In conclusion, investing in international ETFs can provide diversification and potentially higher returns for your portfolio. However, it's crucial to do your research, understand the risks, and consider your investment goals before investing in these funds. By selecting the right mix of international ETFs, you can gain exposure to a variety of markets and potentially achieve your investment objectives.