Exchange-traded funds (ETFs) are big business.
According to Investopedia, during the first semester of 2020, over $200 billion went into ETFs, and the previous year saw an inflow of $326 billion (which was the second-highest amount ever). It’s not surprising since ETFs provide the diversification of mutual funds but with potentially lower fees (because they’re generally not actively managed) and the ability to buy and sell throughout the trading day just like stocks.
In this guide, we look at a specific subset of available ETFs that invest in assets around the world.
Where Can I Trade International ETFs?
The broker will be a mediator between you and the market. But what makes a good broker?
We believe the best brokers must be regulated, transparent about their prices (including deposit or withdrawal fees), responsive to customer queries, and offer plenty of educational materials. We have made it easier for you to find the right broker by shortlisting some for you.
What is an International ETF?
An ETF represents a basket of individual stocks (or other assets) in which you can buy shares in the same way that you would buy shares of a single stock. You can buy and sell at any time during the trading day, which makes ETFs different from mutual funds that are only valued — and bought/sold — once per day.
Here, we define an international ETF as one which invests in regions of the world outside of the USA, UK, or Europe.
Invest in International ETFs in 3 Steps
Open a Trading Account
First, you need to open an account with a broker that meets your needs in terms of reputation, account fees, and (most importantly) whether it lets you trade ETFs. Filling out the online application form can be done in minutes, and — depending on the identification requirements — you may be able to start investing as soon as you’ve deposited some funds.
Choose International ETFs
Your broker will list the ETFs that are available for you to buy. You might be able to filter this list or search for the names we’ve included in this guide. For each listed ETF, you should be able to access a price chart and additional information, but you can also look on leading financial websites for more details.
Place Your Trade
When you’re ready to buy, you can enter the size of your investment, or your stake size if you’re trading the ETF on a spread betting or CFD platform. You can usually buy immediately at the market price, or place an order to buy when the price falls to what you’d like to pay per share.
Best International ETFs to Buy Now
We have curated a list of the ten best international ETFs to buy based on their good liquidity, historical performance, and strong team.
- Vanguard FTSE Emerging Markets ETF
- Invesco China Technology ETF (NYSEARCA: CQQQ)
- Schwab Emerging Markets Equity ETF (NYSEARCA: SCHE)
- Schwab International Equity ETF (SCHF)
- iShares JPMorgan USD Emerging Markets Bond ETF
- Loncar China BioPharma CHNA
- Vanguard FTSE Developed Markets ETF VEA
- iShares Currency Hedged MSCI Emerging Markets ETF - HEEM
- KraneShares MSCI One Belt One Road ETF - OBOR
- Goldman Sachs ActiveBeta Emerging Markets Equity ETF - GEM
1. Vanguard FTSE Emerging Markets ETF - VWO
VWO tracks emerging market stocks. It includes countries like Hong Kong, Taiwan, and India. It may continue to rise as a response to the weak dollar. During 2020 this ETF grew by 15.32%.
2. Invesco China Technology ETF - CQQQ
The CQQQ ETF invests in Chinese technology. It has a management fee of 0.70% and a return on equity of 13.85%. In common with many tech-oriented markets such as the American Nasdaq index, this ETF more than doubled in value between March 2020 and February 2021 but then began to fall back.
3. Schwab Emerging Markets Equity ETF - SCHE
The SCHE ETF is dedicated to emerging markets, excluding South Korea. Taking into account this ETF’s resilience, risk, and opportunity factors, its ESG Fund Rating score is BBB. This places it in the middle of the spectrum.
4. Schwab International Equity ETF - SCHF
SCHF was chosen by analysts as the best ETF for an average investor in a market segment. Its holdings include international stocks, including the Canadian ones, but excluding South Korea and some other small-cap stocks. It has a smaller spread than its competitors, and higher YTD returns, and it stands to benefit from US dollar weakness.
5. iShares JPMorgan USD Emerging Markets Bond ETF - EMB
This ETF is incorporated in the USA but — as its name suggests — invests in emerging markets. It has 542 holdings at the time of writing, and it grew 5.48% in 2020 despite the coronavirus pandemic. EMB tends to rise when the dollar falls.
Expert Tip on Investing in International ETFs“ One of the most important tips for successful trading in international ETFs is to understand your trading goals and how much money you can genuinely afford to lose if the markets melt down. Also, knowledge is everything, so learn how your chosen ETF reacts to world events such as a strengthening or weakening dollar. ”- Mauricio Carillo
Why Trade ETFs?
ETFs are open-ended tradable funds that spread your risk across several stocks or other assets, but this doesn’t make them risk-free. Unlike traditional mutual funds you can buy or sell ETF holdings at any time during the trading day.
Frequently Asked Questions
Why choose just one? You buy shares in an ETF in the same way you would buy shares in a company, so you can diversify even more by buying more than one ETF. Take your pick from our list, backed up by your own research.
It depends when you ask the question. If you believe that worldwide economies will continue to open up after the coronavirus pandemic, now could be a good time to invest in an international ETF.
Both Main Street and Wall Street investors can buy and sell international ETFs. As a “Main Street” investor, you’ll buy ETFs via a broker. Most likely, an online broker.
A share is a unit of company stock whereas an ETF is a basket of stocks that can be bought or sold as a single unit.
Because ETFs are bought and sold like stocks, they are not as mysterious as some of the more exotic tradable financial instruments such as options. The other benefit for beginners is the inherent diversification compared to holding a single stock.
According to Statista, in 2018 the assets managed by ETFs summed up to around $6.18 trillion. Over 5,000 ETFs are being traded in the world.