Top 3 Best International ETFs for American Investors in 2025
This guide breaks down everything you need to know about international ETFs. You’ll learn what international ETFs are, why global diversification matt...
- Invest globally with confidence – Learn how international ETFs work and how they can help diversify your portfolio beyond U.S. stocks.
- Simple, low-cost options explained – Discover beginner-friendly international ETFs with broad exposure and minimal fees.
- Practical guidance, no jargon – Get clear explanations and actionable tips designed for first-time and long-term investors alike.
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Best International ETFs For American Investors In 2025
International ETFs offer a simple way to gain exposure to thousands of companies outside the United States through a single investment. These funds track stock markets across developed and emerging economies, giving investors access to regions and industries that are underrepresented in U.S. portfolios.
In 2025, international equities have delivered performance well above historical norms, with several major global indexes posting high double-digit gains year-to-date. This renewed momentum has drawn attention to the role international markets can play in long-term portfolio growth.
Despite this, many U.S. investors continue to exhibit a strong home-country bias, allocating a disproportionately large share of their portfolios to domestic stocks, even though international markets account for a substantial portion of global economic activity.
International ETFs help correct this imbalance by providing instant diversification across dozens of countries and thousands of companies, often at ultra-low costs, with the best funds charging annual fees below 0.10%.
What Are The Best International ETFs?
Three international ETFs stand out for American investors. They offer ultra-low expense ratios below 0.10% and instant diversification across multiple countries and sectors.
Vanguard Total International Stock ETF (VXUS)
- Holds over 8,000 international stocks from 47 countries
- Charges just 0.05% in annual fees
- Includes both developed and emerging markets
- Returned 29.1% in 2025
iShares Core MSCI EAFE ETF (IEFA)
- Tracks developed markets in Europe, Asia, and Australia
- Ultra-low 0.07% expense ratio
- Holds 2,100+ stocks from 21 developed countries
- Strong liquidity with tight bid-ask spreads
Vanguard FTSE Developed Markets ETF (VEA)
- Lowest expense ratio at just 0.03% annually
- Covers developed markets excluding the U.S.
- Returned 31% in 2025
- Over 4,000 holdings across 23 countries
How To Invest In International ETFs
Investing in international ETFs works like buying any U.S. stock. The process takes minutes and requires no special permissions.
We recommend checking out our detailed article about How to Buy ETFs
Or, here is a condensed version on how to invest:
- Step 1: Choose a Brokerage Firm
Major brokers like Vanguard, Schwab, and Fidelity offer commission-free ETF trading with zero account minimums. Pick any reputable broker that fits your needs.
- Step 2: Open and Fund Your Account
Account opening takes about 10 minutes online. You'll need basic information and identification. Funding occurs through electronic bank transfer in 3-7 business days.
- Step 3: Research and Select Your International ETF
Start with VXUS for broad global exposure including emerging markets. Choose VEA or IEFA if you prefer developed markets only. Compare expense ratios and holdings before deciding.
- Step 4: Place Your Order
Enter the ticker symbol (VXUS, VEA, or IEFA). Specify how many shares or dollar amount you want to invest. Review and confirm your purchase during market hours.
- Step 5: Set Up Automatic Dividend Reinvestment
Enable dividend reinvestment to compound returns over time. This automatically purchases additional shares with dividend payments, boosting long-term growth.
Requirements For International ETF Investing
A U.S. brokerage account with any major broker like Vanguard, Schwab, or Fidelity
Minimum investment equal to one share price, typically $50-$100 for most international ETFs
Valid Social Security number and U.S. address for account opening
Basic identification documents such as driver's license or passport
Funding source like bank account or existing investment account
Understanding that international ETFs are U.S.-domiciled to avoid PFIC tax complications
No special international trading permissions required since these ETFs trade on U.S. exchanges
Age requirement of 18 or older, or custodial account for minors
International ETFs: Pros & Cons
Let's balance the pros and cons of investing in international ETFs, so you make the right investment decision.
Advantages Of International ETFs
Geographic diversification reduces portfolio risk through exposure to different economic cycles
Access to thousands of foreign companies through a single investment
Ultra-low expense ratios starting at 0.03% annually
Commission-free trading at major U.S. brokers
Exposure to faster-growing emerging markets and established developed markets
Currency diversification provides hedge against U.S. dollar weakness
Strong 2025 performance with returns exceeding 26-31%
Trade on U.S. exchanges during regular market hours like domestic stocks
Disadvantages Of International ETFs
Currency risk can amplify losses when U.S. dollar strengthens
Higher volatility compared to domestic U.S. stock funds
Geopolitical risks including trade tensions and regional conflicts
Less familiar companies and markets for American investors
Potential for extended periods of underperformance versus U.S. stocks
Emerging market exposure adds additional volatility and political risk
Time zone differences affect real-time pricing of underlying securities
Costs And Fees
International ETF fees have dropped dramatically over the past decade. The top international ETFs now charge expense ratios between 0.03-0.07% annually. This means a $10,000 investment costs only $3-$7 per year in management fees. Compare this to the 0.50% or higher fees charged years ago.
Commission-free trading at major brokers eliminates transaction costs that previously deterred small investors. Bid-ask spreads are typically just a few cents for major ETFs due to high liquidity. A 0.05% fund versus 0.50% fund results in $9,000 more wealth over 30 years with monthly contributions. Avoid foreign-domiciled funds that face PFIC tax treatment, which can result in 37% tax rates versus preferential capital gains treatment for U.S.-domiciled international ETFs.
Expert Opinion On International Investing
International stocks have cut through the noise though, posting some of their best returns in a long time.
Zachary Evens Morningstar analyst, analysis of international ETF performance in 2025
International ETF Frequently Asked Questions
What is the difference between international and global ETFs?
International ETFs exclude U.S. stocks and focus on foreign markets only. Global ETFs include both U.S. and foreign stocks in one fund. Most American investors prefer international ETFs because they can control their U.S. exposure separately through domestic funds. This approach gives you more flexibility in portfolio allocation and rebalancing.
Should I choose developed markets or emerging markets ETFs?
Developed markets ETFs like VEA and IEFA offer lower volatility and stability through exposure to established economies like Japan, Germany, and the UK. Emerging markets provide higher growth potential but more risk through countries like China, India, and Brazil. VXUS provides both with approximately 20% emerging market allocation, giving you balanced exposure without choosing between them.
How much of my portfolio should be in international ETFs?
Financial advisors typically recommend 20-40% of equity holdings in international stocks. We suggest at least 20% for diversification benefits. Start with 20-25% if you're new to international investing. You can increase this allocation as you become more comfortable with foreign market exposure.
Do international ETFs pay dividends?
Most international ETFs pay quarterly dividends that can be reinvested automatically. Dividend yields typically range from 1-3% annually, depending on the fund and market conditions. These dividends come from the underlying foreign companies in the ETF. Enable automatic reinvestment to compound your returns over time.
What are the tax implications of international ETFs?
U.S.-domiciled international ETFs like VXUS, VEA, and IEFA receive normal capital gains treatment when you sell. Long-term gains are taxed at preferential rates of 0%, 15%, or 20% depending on your income. Foreign-domiciled funds face punitive PFIC taxation with rates up to 37%. This makes U.S.-domiciled international ETFs essential for American investors.
Conclusion: Building Your International ETF Strategy
International ETFs offer a simple and accessible way to broaden your investments beyond the U.S. By investing globally, you gain exposure to a wider range of economies, industries, and growth opportunities that can help balance risk over time.
For many investors, broad international ETFs are an easy starting point. They provide instant diversification across dozens of countries and thousands of companies, often at very low cost. Whether you choose a fund that focuses on developed markets, emerging markets, or a mix of both, international ETFs make global investing straightforward.
With modern investing platforms offering commission-free trading and easy account setup, adding international exposure has never been more convenient. If you’re building a long-term portfolio, international ETFs can be a valuable complement to U.S. stocks, helping create a more resilient and globally balanced investment strategy.
Take a look at our comprehensive comparisons of brokers and investment platforms to help you find the best options for your international investing needs.