The global economy offers incredible low-risk investing opportunities around the world, this page will detail the best international ETFs available. They are some of the most popular investment choices currently, surpassing hedge funds as ETFs are easier to follow. Furthermore, they are not overseen by a fund manager, thus requiring lower fees than other investment funds.
According to Investopedia, during the first semester of 2020 over $200 billion went into ETFs. The year before, there was an inflow of $326 billion, the second-highest amount ever.
This page was created to guide and help you decide which international ETFs suit you the best. Let’s take a look at the list below.
What is an international ETF?
Exchange Traded Funds, also known as ETFs, is a pool of stocks where you can buy a certain amount or a share. There are likely to be many types of financial instruments in these pools.
International ETFs are created by companies from different countries that specialise in certain sectors, regions and/or the size of the company (market cap). These ETFs are like mutual funds but they are bought and sold during the market hours like stocks. Since there are many investment funds put together, when one of these goes up, so does the ETF. The same way, when one of the components has a low, the ETF goes down. However, it is important to take into account that a stronger asset in the pool will affect the total value of the ETF more than a smaller one. Because of this, ETFs have lower risks compared to other instruments.
An ETF can rise or fall because it responds to the market fluctuations. This means that the volatility of a certain type of ETF depends on which group or sector it belongs to. The first ETF ever created was the S&P 500 SPDR in 1993. According to reports, it has $329 billion in assets. Seven years later, the second-biggest ETF was the iShares Core S&P 500 ETF (IVV) which now manages $239 billion worth of assets.
Invest in international ETFs in 3 steps
Open a trading account
Before you can open an account, you should choose a broker. Once you have your pick according to your needs and goals, it is time to sign up. They will ask you to enter your email and choose a password for your new trading account. It is likely that they will send you a verification code. You can find it in your inbox or spam folder. Click on it to enter your new trading account.
Choose international ETFs
Choosing the international ETF you would like to invest in is an indispensable step. After you’ve selected your favourite ones, have a look at the payment methods available and make your first deposit, which can be verified in your inbox. Good brokers should always have flexible payment methods. Remember, there will be a commission and fees you have to include in your estimations.
Place your trade
Once you are done with these two steps, go to the ETF option on the broker’s website and select the number of shares you would like to buy.
Where can I trade international ETFs?
Trading international ETFs is not a complicated process, and we have shortlisted our top three selected brokers on a table below. It is essential to know your own goals, so you can select the type of broker you need more precisely. The broker will be a mediator between you and your securities exchange. But what makes a good broker?
We believe the best international ETF brokers of 2021 must be well regulated. It is possible that you will be offered a different account depending on your jurisdiction.
A good broker is also transparent about its prices. There might be withdrawal fees and deposits or commissions. Also, a research and educational section offered by the broker will always be a plus since you can refer to it if you are just beginning or have a specific doubt.
Furthermore, the best broker should have good customer support. See what communication channel is best for you. They might have social media, phone numbers, emails, an address or a live chat. It is also important that they offer a language selection so you can buy or sell without a problem. Sometimes customer service might have fewer languages available for communication than the trading platform.
Best international ETFs to buy now
We have prepared a list of the best 10 international ETFs to trade based on their good liquidity, historical performance and a strong team behind them:
- 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
Vanguard FTSE Emerging Markets ETF - VWO
VWO tracks emerging market stocks. It includes countries like Hong Kong, Taiwan, India, among others. It may continue to rise as a response to the weak dollar. During 2020 this ETF grew by 15.32%.
Invesco China Technology ETF - CQQQ
CQQQ is based on Chinese technology. It has a management fee of 0.70% and a return on equity of 13.85%. This ETF has $1.38 billion worth of net assets and grew by 58.33% in a year. This boost could be explained by the investment deal between China and the European Union that will go into the EU parliament to be approved. This deal would permit China to persist as one of the largest global technological supply chains in the world.
Schwab Emerging Markets Equity ETF - SCHE
The yearly return of this ETF is about 23.73%. The SCHE is dedicated to emerging markets, although it does not include South Korea. Taking into account this ETF’s resilience, risk and opportunity factors, it's ESG Fund Rating score classifies it as a BBB situating it in the middle of the spectrum.
Schwab International Equity ETF - SCHF
SCHF was chosen by analysts as the best ETF choice for an average investor in a market segment. This ETF holds international stocks, including the Canadian ones, but excluding South Korea and other small-caps. It has a smaller spread than its competitors, and higher YTD returns. It is possible that some of the emerging markets stocks will help SCHF rise since they benefit from the dollar’s lows, and their average one-year daily return of 12.57% could rise.
iShares JPMorgan USD Emerging Markets Bond ETF - EMB
As the name might imply, this ETF is dedicated to emerging markets and is incorporated in the USA. It now has a number of 542 holdings. Despite coronavirus, EMB grew 5.48% in 2020. It is expected that while the dollar continues to fall, this ETF will steadily rise.
Loncar China BioPharma - CHNA
Loncar China BioPharma was created in 2018 and is a basket of Chinese health care companies with a total of 50 holdings. Its one-year daily return is almost 40%. Its management fee is 0.79% and its primary exchange is NASDAQ. It is important to remember that China developed a COVID-19 vaccine called Sinovac so the upcoming coronavirus vaccine events will determine the movement of this ETF.
Vanguard FTSE Developed Markets ETF - VEA
VEA was created in 2007 in the category of Foreign Large Cap Equity with a daily trading volume of about 9,665,800. It has a total of 1,859.8 million shares. Its largest holdings are Samsung Electronics Co. Ltd and Nestle SPA. It is only 10% higher than last year but has grown by 55% in the last five years.
iShares Currency Hedged MSCI Emerging Markets ETF - HEEM
Born in 2014, HEEM is another great emerging markets ETF. On average, their one year daily total return is at 27.67%. This ETF is hedged to the USD, and it is most liable to vanilla. In its portfolio, it includes South Korea as part of the equity.
KraneShares MSCI One Belt One Road ETF - OBOR
OBOR was created in 2007 and its jurisdiction is the United States. According to the OBO fun description, this ETF “tracks a market-cap-selected, tier-weighted index of companies likely to benefit from China's "One Belt, One Road" initiative”. Its average market return in a year is 13.48%.
Goldman Sachs ActiveBeta Emerging Markets Equity ETF - GEM
GEM is dedicated to emerging market stocks with 4 sub-indexes: value, quality, low volatility and momentum. Its top two sectors are finance and technology. Despite its negative performance in 2018 (-13.51%), it was able to rise in 2019 by a positive 17.26%.
Expert tip on investing in international ETFs
We believe that one of the most important tips to successful trading in international ETFs is to understand your trading goals. Make sure you are well informed on market movements and how that would affect the ETF you are in, how much time you have, how much money you can spend and what you will do with possible gains or losses. When it comes to entering the market, knowledge is the key.
Why trade ETFs?
ETFs are open trade funds that have the advantage of having lower risk. They have a high trading flexibility thanks to their portfolio diversification. You can access different market segments without being an expert trader in such sectors as health care, technology, finance or others.
Nevertheless, it is important to be cautious because your funds will still be at risk, and your choices should depend on your investment or trading ideas.
Frequently Asked Questions
The number one international ETF will match the sector you are interested in investing or trading in. It will be accessible through a broker that has fees and commissions that will match your needs.
This will depend on how much money and time you plan to spend on your ETFs. They are low-risk and you could leave your funds there for years or try out day trading.
Both main street investors and Wall Street investors can buy and sell international ETFs.
A share is a unit of a stock and ETFs is a basket of stocks that can be bought or sold as a potion or as a whole.
It is one of the lower-risk options on the market. It is important to research before making any financial choice.
According to Statista, in 2018 the assets managed by ETFs summed up to around $6.18 trillion. There are over 5,000 ETFs being traded in the world.