5 Best International Stock Funds to Buy

May 16, 2024

Investing in international stock funds can be an excellent way to diversify your investment portfolio and tap into the potential growth of companies outside your home country. With the global economy becoming increasingly interconnected, international stocks offer investors exposure to a broader range of industries and markets. In this article, we’ll explore five of the best international stock funds to consider adding to your investment portfolio.

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What are International Stock Funds?

Before delving into specific funds, let’s first understand what international stock funds are. These funds invest in stocks of companies located outside the investor’s home country. They may focus on a particular region, such as Europe, Asia, or emerging markets, or they may have a global approach, investing in companies from various countries worldwide.

Why Invest in International Stock Funds?

Benefits of Diversification

Diversification is one of the primary reasons investors choose international stock funds. By spreading your investments across different geographic regions, industries, and currencies, you can reduce the risk associated with investing in any single market or sector.

Exposure to Global Growth Opportunities

Investing in international stock funds allows you to access opportunities in regions experiencing rapid economic growth that may not be available domestically. Emerging markets, in particular, offer the potential for high returns as these economies develop and expand.

Considerations Before Investing

Before investing in international stock funds, it’s essential to consider several factors:

Risk Factors: International investing comes with its own set of risks, including currency fluctuations, geopolitical instability, and regulatory differences.
Expense Ratios and Fees: Be mindful of the fees associated with the fund, including expense ratios, management fees, and transaction costs, as these can eat into your returns over time.

Top 5 International Stock Funds

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Fund 1: Fidelity International Index Fund (ticker: FSPSX)

The Fidelity International Index Fund (FSPSX) is renowned for its low expense ratio, making it an attractive option for investors seeking cost-effective exposure to international markets. With an expense ratio of just 0.04%, this fund aims to replicate the performance of the MSCI EAFE Index, which tracks developed market equities outside of the United States and Canada.

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Fund 2: Vanguard Total International Stock ETF (VXUS)

Vanguard Total I.S. ETF (VXUS) is a popular choice among investors seeking broad exposure to international equities. With an expense ratio of 0.08%, VXUS invests in thousands of stocks across developed and emerging markets, providing diversification across regions and sectors.

Fund 3: iShares Core MSCI EAFE ETF (IEFA)

The iShares Core MSCI EAFE ETF (IEFA) offers investors exposure to developed markets in Europe, Asia, and the Far East. With an expense ratio of 0.07%, IEFA tracks the MSCI EAFE Index, which includes large and mid-cap stocks from 21 developed market countries, excluding the United States and Canada.

Fund 4: iShares Core MSCI Emerging Markets ETF (IEMG)

For investors looking to capitalize on the growth potential of emerging markets, the iShares Core MSCI Emerging Markets ETF (IEMG) presents an opportunity. With an expense ratio of 0.09%, IEMG tracks the MSCI Emerging Markets Index, which includes stocks from countries such as China, Brazil, India, and South Korea.

Fund 5: Schwab Fundamental International Small Company Index Fund (SFILX)

The Schwab Fundamental International Small Company Index Fund (SFILX) focuses on small-cap international stocks, offering investors exposure to companies with strong fundamentals and growth potential. However, it’s important to note that SFILX has a higher expense ratio compared to other funds on this list, standing at 0.39%.

These top 5 I.S. funds provide investors with a range of options to diversify their portfolios and capitalize on global investment opportunities. It’s essential to conduct thorough research and consider factors such as investment objectives, risk tolerance, and fees before choosing the right fund for your investment strategy.

Comparison of the Top 5 Funds

A comprehensive comparison of the top 5 I.S. funds will consider factors such as performance, risk, expense ratios, and portfolio composition.

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How to Invest in International Stock Funds

Investing in international stock funds is relatively straightforward:

Research: Conduct thorough research on different funds, considering factors such as performance, fees, and investment objectives.
Choose a Fund: Select a fund that aligns with your investment goals and risk tolerance.
Open an Account: Open a brokerage account if you don’t already have one.
Invest: Once your account is set up, invest in your chosen I.S. fund.

Conclusion

International stock funds offer investors the opportunity to diversify their portfolios and tap into global growth opportunities. By carefully selecting the right funds and considering factors such as risk and fees, investors can potentially enhance their investment returns over the long term.

FAQs

What are international stock funds?
I.S funds invest in stocks of companies located outside the investor’s home country, providing exposure to global markets.
How do I choose the best international stock fund?
Consider factors such as performance, fees, investment objectives, and risk tolerance when selecting an I.Sk fund.
Are international stock funds risky?
Yes, I.S funds come with their own set of risks, including currency fluctuations, geopolitical instability, and regulatory differences.
Can international stock funds provide better returns than domestic funds?
I.S funds have the potential to provide better returns than domestic funds, particularly during periods of global economic growth.
Are there any tax implications when investing in international stock funds?
Investors should be aware of any tax implications, such as foreign tax withholding, when investing in international stock funds.