For more than a decade, investors had a simple rule: buy US stocks and ignore the rest of the world. That rule broke down in 2025, and the change has carried into 2026. As a result, one of the most-searched investing questions this year is which are the best international ETFs to buy. US valuations are stretched, the dollar has been weak, and Wall Street leaders are openly warning about complacency. Many investors are now asking whether their portfolios lean too heavily on one country. This guide covers the five best international ETFs for 2026, what each one does well, the risks you take on, and how to build a globally diversified portfolio step by step.
Why International ETFs Are Back in Focus in 2026
The shift started in 2025. That year, the MSCI EAFE index of developed markets outside North America returned roughly 30% in US-dollar terms, and the broader MSCI ACWI ex-USA index did about the same. The S&P 500, by comparison, gained a little under 18% including dividends. It was the widest gap in favour of non-US stocks since the late 2000s. A falling US dollar did much of the work. The US Dollar Index had its weakest first half since the early 1970s, which lifted the value of foreign assets for dollar-based investors.
The case for global diversification in 2026 goes beyond last year’s returns. The United States now makes up well over 60% of the MSCI All Country World Index, while its share of global GDP is closer to a quarter. Much of that weight sits in a small group of mega-cap technology companies. So an investor who owns only a US index fund has made a large, concentrated bet on one economy, one currency and one sector, often without realising it. International ETFs are the simplest and cheapest way to spread that risk.
Valuations point the same way. For much of 2025 and 2026, the S&P 500 traded at a forward price-to-earnings ratio in the low 20s. Developed markets outside the US mostly traded in the low-to-mid teens, and emerging markets were often cheaper still. Valuation is a poor tool for timing the market. Over periods of ten years or longer, though, starting valuations have been one of the more reliable guides to future returns. That is why several large asset managers now project higher long-run returns for non-US equities than for US equities.
How We Picked the Best International ETFs
Hundreds of funds hold foreign stocks, and many of them are expensive, thinly traded or too narrow for most people. To pick the best international ETFs for 2026, we used five criteria that matter to long-term investors:
- Low cost: Expense ratios compound against you every year. Our core picks charge less than 0.10% a year.
- Diversification: Broad exposure across countries, sectors and company sizes lowers the risk that one market ruins your results.
- Liquidity and size: Large, heavily traded funds have tight bid-ask spreads and very little risk of closing.
- Index quality: A transparent, rules-based benchmark from a major provider such as MSCI or FTSE.
- Role in a portfolio: Each pick fills a distinct job, whether that is a core holding, a satellite position or a hedge.
Expense ratios and holdings change over time, so check the latest figures on the fund provider’s website before you invest. Readers outside the US should also know that US-domiciled ETFs may carry estate-tax exposure and may not be available to retail investors in the EU and UK. Those investors can usually find UCITS equivalents that track the same indices on the London, Frankfurt or Amsterdam exchanges.
The 5 Best International ETFs to Buy in 2026
1. Vanguard Total International Stock ETF (VXUS): Best All-in-One Choice
If you buy only one international fund, VXUS is hard to beat. It tracks the FTSE Global All Cap ex US Index and holds more than 8,000 stocks across developed and emerging markets, from large multinationals to small companies. Its expense ratio is only a few hundredths of a percent, among the lowest in the industry. Japan, the United Kingdom, Canada, China, Taiwan, India and the major European economies are all included, roughly in proportion to their market size.
VXUS works best as the core international holding for a buy-and-hold investor. It automatically covers the rise of Asian chipmakers, European industrials and Indian consumer companies, so you don’t have to guess which region will lead next. The main drawback is that you can’t adjust the mix. Your emerging-markets weighting will be around a quarter of the fund, whether or not you want that much.
2. iShares Core MSCI EAFE ETF (IEFA): Best Developed Markets ETF
Some investors want to control their emerging-market exposure separately. For them, IEFA is one of the most efficient developed markets ETFs available. It covers Europe, Australasia and the Far East, including small caps, with roughly 2,500 to 3,000 holdings and a very low fee. Japan, the UK, France, Switzerland and Germany make up the largest country weights.
Developed international markets offer something the US index increasingly lacks: large weights in financials, industrials, healthcare and consumer staples, often with higher dividend yields. Europe’s banks, defence contractors and industrial firms benefited from higher interest rates and rising government spending over 2025 and 2026. Japan’s long run of corporate-governance reforms has also pushed companies to return more cash to shareholders. The trade-off is that IEFA holds relatively little high-growth technology, so it can lag in strong tech rallies.
3. iShares Core MSCI Emerging Markets ETF (IEMG): Best Emerging Markets ETF
Emerging markets are home to most of the world’s population and a growing share of global growth. IEMG is one of the cheapest and broadest ways to own them. It holds thousands of companies across China, India, Taiwan, South Korea, Brazil, Saudi Arabia, South Africa and more, and it includes small caps, which many older emerging markets funds leave out.
The emerging-markets opportunity in 2026 is closely tied to the AI supply chain. Taiwanese and South Korean semiconductor and memory makers are some of the biggest beneficiaries of global AI capital spending, and they are among the largest positions in any broad emerging markets ETF. India offers long-term domestic growth, and Chinese equities have drawn renewed foreign interest after years of heavy selling. Volatility is the cost. Emerging markets can fall 20% to 30% in a bad year, and political, currency and regulatory risks are real. For most investors, a position of 10% to 25% of the equity allocation is plenty.
4. Avantis International Small Cap Value ETF (AVDV): Best for Factor Investors
Market-cap-weighted funds are dominated by large companies. AVDV instead targets smaller, cheaper, profitable companies in developed markets outside the US. Its expense ratio is higher than the core index funds, at a few tenths of a percent, but it is still reasonable for an actively managed, factor-based strategy. The fund has built a strong following among evidence-based investors.
Research going back decades finds that small-cap and value stocks have historically earned a premium over the broad market, though with long stretches of underperformance along the way. International small-cap value stocks have been especially cheap in recent years, which makes AVDV an interesting satellite holding. It is not a core fund. Think of it as a tilt, perhaps 5% to 15% of your international allocation, for patient investors who can live with results that sometimes differ sharply from the index.
5. Xtrackers MSCI EAFE Hedged Equity ETF (DBEF): Best Currency-Hedged Option
When you buy foreign stocks, you also take on currency risk. A weaker dollar raised international returns for US investors in 2025. If the dollar strengthens sharply, the reverse happens. DBEF holds developed-market stocks and uses currency forwards to hedge most of that foreign-exchange exposure, so your return reflects local stock performance and not currency swings.
Currency-hedged ETFs are useful for investors who want equity diversification without betting on the dollar, and for those who think the dollar’s decline has gone far enough. They cost more than unhedged funds, and hedging can reduce returns when the dollar weakens. Many advisers take a middle path and combine a hedged fund with an unhedged one, so they hold about half of their developed-market currency exposure.
Honourable mentions: The Vanguard FTSE Developed Markets ETF (VEA) and the Schwab International Equity ETF (SCHF) are excellent low-cost alternatives to IEFA. The Vanguard International High Dividend Yield ETF (VYMI) suits income-focused investors, and single-country funds such as the iShares MSCI Japan ETF (EWJ) or iShares MSCI India ETF (INDA) let you express targeted views.
International ETFs 2026: Risks Every Investor Should Understand
No investment is risk-free, and international ETFs in 2026 come with their own set of risks. Understanding them before you invest will help you stay the course when markets get rough.
- Currency risk: Exchange-rate moves can add to or subtract from returns by several percentage points a year. A rebound in the dollar would reduce unhedged returns for US investors.
- Geopolitical risk: Tensions in the Middle East, trade disputes between the US and China, and conflict in Europe can cause sudden sell-offs, especially in emerging markets.
- Concentration within emerging markets: A few mega-caps, mainly Taiwanese and Korean chipmakers and large Chinese internet platforms, account for a sizeable share of most EM indices.
- Tax drag: Foreign governments often withhold tax on dividends. US investors can usually claim the foreign tax credit in taxable accounts but not in IRAs.
- Global correlation: During a true global crisis, stock markets tend to fall together. International diversification lowers long-term concentration risk, but it will not protect you from a worldwide crash.
That last point matters in 2026. Several prominent bank executives and central banks, in their financial stability reviews, have warned that markets may be underpricing risks from elevated valuations, high government debt and geopolitical shocks. International ETFs spread risk across economies. They do not replace an emergency fund, a sensible bond allocation or a time horizon long enough to ride out downturns.
“For fifteen years, investors were rewarded for ignoring the rest of the world. That makes this the most important time to reconsider. Global diversification isn’t about predicting which market wins next year. It’s about not staking your retirement on a single country, a single currency and a handful of technology stocks. The cheapest insurance policy in investing is a low-cost international index fund.” — Senior multi-asset portfolio strategist at a leading global asset manager
How to Add the Best International ETFs to Your Portfolio
Picking a fund is the easy part. The harder part is deciding how much to hold and sticking with that plan. Here is a practical framework you can use today:
- Step 1, decide your target allocation: A neutral global portfolio holds about 35% to 40% of equities outside the US. Many advisers suggest at least 20% to 40% for US investors. Investors in the UK, Europe, India or Australia face the opposite problem, home bias, and often need more global exposure than they hold.
- Step 2, choose a simple structure: The easiest approach is one total-international fund such as VXUS. A two-fund approach, such as IEFA plus IEMG in about a 75/25 split, lets you adjust the developed-to-emerging mix.
- Step 3, add tilts only if you understand them: Satellite positions such as AVDV, a hedged fund or a single-country ETF should usually make up no more than 10% to 20% of your international allocation.
- Step 4, use the right account: Where possible, hold international funds in taxable accounts to capture foreign tax credits. Keep high-yield bond funds in tax-advantaged accounts.
- Step 5, invest gradually: If you’re moving a large lump sum while volatility is high, dollar-cost averaging over three to six months can reduce the risk of bad timing and make the move easier to stick with.
- Step 6, rebalance annually: Once a year, or when an allocation drifts by more than five percentage points, trim what has grown and top up what has lagged.
Rebalancing is especially important now. Many investors who added international funds in 2025 have watched those positions grow well beyond their original weight. Taking some profits and returning to your target keeps your risk in line with your plan. It also enforces the discipline of buying low and selling high.
Global Diversification vs. Home Bias: What the Data Shows
Home bias, the tendency to overweight your own country’s stocks, is one of the most persistent mistakes in personal finance, and it is not just an American habit. Japanese investors who went all-in on domestic stocks at the 1989 peak waited more than three decades for the Nikkei 225 to regain its old high, which it finally did in 2024. Investors who concentrated in UK or European equities through the 2010s badly trailed the global index. The lesson in both cases is the same: no single market leads forever.
Market leadership has historically rotated in long cycles. US stocks beat international stocks through much of the 1990s. International and emerging markets led from roughly 2002 to 2007. The US then dominated for most of the 2010s and early 2020s. Nobody can reliably say when these cycles will turn, which is the strongest argument for owning both. A globally diversified investor will never own the single best-performing market, but will also never be trapped in the worst one.
Conclusion: Are International ETFs Worth Buying in 2026?
For most long-term investors, the answer is yes. The best international ETFs for 2026 give you cheap, instant access to thousands of companies outside the United States. Those markets trade at lower valuations, offer different sector exposure and give you currency diversification that a US-only portfolio lacks. Whether the rotation that began in 2025 continues or pauses, holding a meaningful share of your equities abroad is sound risk management, not a speculative bet.
Key takeaways:
- International stocks outperformed the US by a wide margin in 2025, helped by a weaker dollar and lower starting valuations.
- VXUS is the simplest all-in-one pick. IEFA and IEMG offer a flexible two-fund developed and emerging markets approach.
- AVDV adds a small-cap value tilt, and DBEF helps manage currency risk.
- Keep costs low, and most core international ETFs now charge well under 0.10% a year.
- Target 20% to 40% of your equity allocation outside your home market, and rebalance once a year.
- International diversification reduces concentration risk but won’t prevent losses in a global downturn. Keep a long time horizon.
This article is for informational purposes only and does not constitute financial advice. Past performance is not a guarantee of future results. Consider speaking with a qualified financial adviser before making investment decisions.
