For investors who want to geographically diversify, international equity funds can be an easy avenue. These funds invest in stocks from developed markets around the world, and thus may appeal to investors who worry that emerging-market stocks may add too much risk to their portfolios.
These three international equity funds earn Gold
What Are International Equity Funds?
Funds in the international equity category must invest at least 90% of their equity assets in countries other than Canada and the United States and at least 70% of their equity assets in developed countries. Funds that do not meet any of the requirements of the more focused geographic equity categories and which invest less than 90% of their assets in any single country or region are assigned to the category.
Definitions of developed markets can vary. Some countries, such as Poland and South Korea, can be classified as either a developed or emerging market, depending on the fund or index provider.
The 3 Best International Equity Funds and ETFs to Buy In 2026
To find the best international equity funds and ETFs to buy, we screened for the lowest-cost primary share classes earning a Medalist Rating of Gold with 100% analyst coverage. All the funds and ETFs on the list fall into the international equity
- Vanguard FTSE Developed All Cap ex North Amer Idx ETF VIU
- Vanguard FTSE Developed All Cap ex US Index ETF VDU
- iShares Core MSCI EAFE IMI Index ETF XEF
Morningstar expects these funds to outperform their peers over a full market cycle. Though they all fall into the same category, they may practice different strategies and behave differently. Investors need to do some homework to understand exactly what a particular fund invests in before buying.
Here’s a quick look at each of the best international equity funds and ETFs. Be sure to review a fund’s complete report for more details.
Vanguard FTSE Developed All Cap ex North Amer Idx ETF
- : C$9.1 billionFund Size
- : Canada Fund International EquityMorningstar Category
- : ★★★★Morningstar Rating
This fund has climbed 25.27% over the past 12 months, outperforming the average fund in its category, which rose 14.34%. The Vanguard fund, launched in December 2015, has climbed 17.54% over the past three years and 10.81% over the past five.
Vanguard FTSE Developed All Cap ex North America Index ETF has a market-cap-weighted portfolio that holds nearly all stocks from developed markets outside of North America. Its low fee and expansive portfolio make it one of the more appealing international stock funds available.
The fund tracks the FTSE Developed All Cap ex North America Index. It targets small-, mid-, and large-cap stocks from overseas developed markets, pulling in more than 3,600 names. The final portfolio weights its holdings by market capitalization. Market-cap weighting is an efficient way to size holdings because it harnesses the market’s consensus opinion of each stock’s relative value. Stocks that grow in size take up a larger share of the portfolio, while shrinking companies that may be struggling will have less importance.
Diversification is a strength of this portfolio, owing to its expansive target index. This fund holds over 3,600 stocks, with its 10 largest positions consistently accounting for around 10% of assets. No one position collects more than 2% of the allocation. Some of its largest holdings are European multinationals with diversified revenue streams and robust competitive advantages.
Low fees also contribute to strong category-relative performance. The fund returned 11.5% annualized for the five years through September 2025, outpacing its average peer by 1.66 percentage points annualized. Volatility was slightly higher, but risk-adjusted returns also looked favorable relative to the category average. Going forward, investors should expect the strategy to do well when developed markets do well.
Zachary Evens, analyst
Read Morningstar’s full report on the Vanguard FTSE Developed All Cap ex North Amer Idx ETF.
Vanguard FTSE Developed All Cap ex US Index ETF
- : C$756.8 millionFund Size
- : Canada Fund International EquityMorningstar Category
- : ★★★★Morningstar Rating
This fund has climbed 25.35% over the past 12 months, outperforming the average fund in its category, which rose 14.34%. The Vanguard fund, launched in August 2013, has climbed 17.09% over the past three years and 10.98% over the past five.
Vanguard FTSE Developed Markets Index’s market-cap-weighted portfolio holds nearly all stocks from the developed international market. Its low fee and expansive portfolio make it one of the more appealing international stock funds available.
The fund tracks the FTSE Developed ex US All Cap Index. It targets small-, mid-, and large-cap stocks from international developed markets, pulling in almost 4,000 names. The final portfolio weights its holdings by market capitalization. Market-cap weighting efficiently sizes holdings by harnessing the market’s consensus opinion of each stock’s relative value. Stocks that grow faster than peers take up a larger share of the portfolio, while struggling companies will have less importance.
The Exchange-traded fund share class returned 11.4% annualized for the five years through September 2025, similar to other developed-market index funds but 1.2 percentage points better than the Morningstar Category average. Its volatility tends to be slightly elevated for this index, but risk-adjusted returns still measure up well.
Zachary Evens, analyst
Read Morningstar’s full report on the Vanguard FTSE Developed All Cap ex US Index ETF.
iShares Core MSCI EAFE IMI Index ETF
- : C$18.8 billionFund Size
- : Canada Fund International EquityMorningstar Category
- : ★★★★Morningstar Rating
Over the past 12 months, the iShares fund rose 19.82%, while the average fund in its category rose 14.34%. The fund, which launched in April 2013, has climbed 16.20% over the past three years and 10.45% over the past five.
IShares Core MSCI EAFE funds provide market-cap-weighted portfolios of nearly all stocks in the developed international market outside of North America. Their category-representative portfolios and low turnover make them compelling options.
The funds track the MSCI EAFE Investable Market Index. It targets nearly all stocks from 21 overseas developed markets, encompassing 99% of the investable market. The index weights its holdings by market capitalization. Market-cap weighting is an efficient way to size holdings because it harnesses the market’s consensus opinion of each stock’s relative value. Stocks that perform well take up a larger share of the portfolio, while shrinking companies that may be struggling will have less importance.
Diversification is a strength of this strategy. The index usually holds around 2,600 names with its 10 largest positions typically accounting for around 11% of the portfolio. The strategy is not as broad as other index-tracking funds that include the emerging markets segment. But the funds still cover a lot of ground and reasonably represent the opportunity set available to active managers.
This strategy is shared among several exchange-traded funds and mutual funds. Most of them charge low fees that rank in their category’s cheapest quartile. Fees directly detract from total return, so low-cost funds and share classes should perform better and better represent the index than those that charge more.
Brendan McCann, associate analyst
Read Morningstar’s full report on the iShares Core MSCI EAFE IMI Index ETF.
