Reviewed by Sep 30, 2020| Updated on
What is an International ETF?
An International ETF (Exchange Traded Fund) is an ETF that invests mainly in foreign-based securities. The focus can be regional, global, or on a specific country, and may hold equities or fixed-income securities.
An international ETF may track global markets, or track a country-specific benchmark index. ETFs that invest in less developed country stocks or bonds are known as emerging markets or frontier markets ETFs. Investors can use these ETFs to diversify the geographic and political risks associated with their portfolios.
Breaking Down International ETFs
International ETFs are normally invested passively around a basic benchmark index, but the index may differ considerably from one fund manager to the other. Some funds, especially those with a wide global outreach or those that invest in countries with progressive economies, can provide strong expansion by investing in hundreds of companies.
An ETF that invests in a single foreign country may carry higher risks than an international ETF that spreads their investments among many countries. If a single country undergoes a major slump or other financial hardship, an ETF that only invests in securities could have a major performance shortfall. Advances in globalisation and financial regulation have opened more financial markets to the outside investment. Expense ratios for international ETFs tend to be higher than the averages because of the higher costs to invest abroad.
Is Investing in International ETFs Good For You?
The right amount of international exposure suitable to you depends on your risk tolerance and your level of participation. A hands-off approach would be with a broad-based international equity fund that provides exposure over several countries. If you are looking for an active approach, pursue a single-market ETF only if you can track your investment on a daily basis.
Tax planning is the process of analysing a financial plan or a situation from a tax perspective. Read more
A prospectus is defined as a legal document describing a company’s securities that have been put on sale. Read more
Credit money refers to a future monetary claim against an individual who has used the credit facility to buy goods and services. Read more
Shariah-compliant funds are funds that follow the principles of Shariah law. Read more
Yield or bond yield points to the returns provided and realised by an investor on his investment over a given timeframe. Read more
Green levy seeks to encourage corporations to adopt eco-friendly technologies. Read more