How to Use ETFs for International Exposure

28 June 2025

Investing isn’t just about what’s happening in your backyard. These days, the world is more connected than ever—and your investment portfolio should reflect that. Want a taste of global growth without the stress of picking individual international stocks or navigating foreign markets? That’s where ETFs step in to save the day.

In this guide, we’re going to break down exactly how to use ETFs (Exchange-Traded Funds) to gain international exposure. Whether you're new to investing or just looking to diversify, this is your go-to manual. Grab your coffee and let’s get global.

Why Bother With International Exposure?

Let’s face it—putting all your eggs in one basket is hardly the golden rule of investing. If your entire portfolio is centered on domestic stocks, you’re missing out on opportunities abroad. Think of it like traveling: sure, your hometown might be great, but stepping outside the borders opens you up to new, potentially exciting experiences—and returns.

Here’s why international exposure matters:

- Diversification: Different markets behave differently. If one region tanks due to economic issues, others may thrive.
- Growth Potential: Emerging markets, for example, could grow faster than developed ones.
- Currency Benefits: Foreign currencies rising against your home currency can bump up your returns.
- Inflation Hedge: Exposure to commodities and foreign economies can sometimes help buffer inflation's bite.

Now that we’ve got the “why” out of the way, let's dive into the “how.”

What Are ETFs, Really?

Before we go globe-trotting with ETFs, let’s revisit what they are. ETFs are like mutual funds but cooler. They trade on stock exchanges, just like individual stocks. But instead of owning one company, you own a basket of them—sometimes hundreds or even thousands.

What’s awesome about ETFs?

- Low Costs: Most have lower fees compared to mutual funds.
- Liquidity: You can buy and sell them anytime during market hours.
- Transparency: You usually know exactly what’s in the ETF.
- Accessibility: No need to be a Wall Street wizard—you can start small.

Now, when we talk about international ETFs, they behave the same way—but with global flavor.

Types of International ETFs

The world is your oyster, and international ETFs give you the choice of what part of the globe you want to bite into. Here's a breakdown of the types of international ETFs to consider:

1. Broad International Market ETFs

These ETFs give you exposure to a large swath of countries outside your home country. One popular example is the Vanguard Total International Stock ETF (VXUS)—it offers a little bit of everything outside the U.S.

Perfect for:
- Beginners
- One-and-done style investing
- Adding general international exposure

2. Region-Specific ETFs

Want to focus on Europe? Asia? Latin America? There’s an ETF for that.

Examples:
- iShares Asia 50 ETF (AIA)
- SPDR EURO STOXX 50 ETF (FEZ)

These ETFs let you ride the growth of a specific continent or region—ideal if you’ve done your homework and believe in that region’s future.

3. Country-Specific ETFs

Here’s where things get spicy. If you're bullish on, say, India or Brazil, a country-specific ETF lets you double down.

Examples:
- iShares MSCI India ETF (INDA)
- iShares MSCI Brazil ETF (EWZ)

These are riskier but can offer higher rewards if you play your cards right.

4. Emerging Markets ETFs

Emerging markets can be a goldmine—but also a rollercoaster. These ETFs target countries in early stages of economic development. They may be more volatile, but they could offer greater long-term growth.

Example:
- iShares MSCI Emerging Markets ETF (EEM)

Perfect for:
- Risk-takers
- Long-term investors with a higher tolerance for market swings

5. Thematic or Sector-Based International ETFs

Love tech, but want it global? Want clean energy from Europe? Thematic ETFs focus on specific industries abroad.

Example:
- Global X MSCI China Consumer Discretionary ETF (CHIQ)—for China’s growing middle class
- iShares Global Clean Energy ETF (ICLN)—for tapping into renewable energy globally

These work well for investors with strong convictions about future trends.

How to Choose the Right International ETF

Too many choices? Don’t let analysis paralysis get you down. Here’s how to narrow it down:

✅ Define Your Goal

Are you looking for steady growth? High returns, even if they’re risky? Or just to round out your portfolio? Your goal will guide your ETF pick.

✅ Check the Expense Ratio

This is the cost of owning the ETF. Lower is usually better because high fees can eat into your profits over time.

✅ Look at the Holdings

Take a peek under the hood. Which companies or sectors is the ETF invested in? Does that match your expectations?

✅ Performance History

Past performance isn’t everything, but it tells a story. Compare it with other similar ETFs to see how it stacks up.

✅ Currency Risk

ETFs that aren’t hedged can be affected by currency fluctuations. Some investors like that potential upside; others want to avoid the added risk.

Building a Balanced Portfolio With International ETFs

Let’s talk strategy.

🧩 Don’t Go All In

International exposure is great, but it shouldn’t be your whole portfolio. Keep a mix of domestic and global investments.

📊 Use a Core-Satellite Approach

Think of your portfolio as a solar system. Your “core” should be broad market ETFs (domestic and international). The “satellites” can be your riskier plays—like emerging market or country-specific ETFs.

📅 Rebalance Annually

Markets change, and so should your portfolio (slightly). Once a year, check your allocation. If international ETFs have grown too large a share, trim back a bit, and vice versa.

The Pros and Cons of International ETFs

Before you jump on board, let’s weigh the good and the not-so-good.

👍 Pros

- Easy diversification
- Lower costs than mutual funds
- Access to global growth
- Can be bought and sold like stocks
- Transparent and flexible

👎 Cons

- Currency fluctuations can add volatility
- Political and economic risk in foreign countries
- Some markets have less regulatory oversight
- Can be too narrow if not chosen carefully

Still, the benefits often outweigh the risks for long-term investors.

Common Mistakes to Avoid

Even smart investors can trip up. Here’s what to steer clear of:

❌ Chasing Performance

Just because an ETF did well last year doesn’t mean it will repeat. Stick to your plan.

❌ Ignoring Fees

A slightly higher fee may seem like no big deal, but over years, it adds up.

❌ Going Too Niche

Don’t put all your faith in a country-specific ETF hoping for a jackpot. Balance is key.

❌ Not Understanding What You’re Buying

Always know the ETF's strategy, holdings, and risks before you invest. Blind bets are for poker, not portfolios.

Final Thoughts: Embrace the World

Let’s be real—investing can feel intimidating. But using ETFs for international exposure makes stepping into the global market way less overwhelming. With low fees, diversified holdings, and user-friendly platforms, ETFs are the passport to global investing without the layovers and jet lag.

Sure, there’s risk. But with risk comes opportunity—and the chance to grow your money alongside the booming economies of the future.

So, if you’ve been sitting on the fence about going global, now’s the time. Start small. Stay consistent. Diversify smartly.

Your future self might just thank you from a beach in Bali or a boardroom in Berlin.