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Canadian investors should look beyond the border for diversification, given that Canada represents just 3% of global stock market capitalization. What’s on our list of international ETFs for this year?
You can hardly say you have diversified equity exposure without getting outside of North American investments, which is why we recommend saving a place in any couch-potato portfolio for an international (meaning overseas) fund. In practical terms, this usually means exchange-traded funds (ETFs) using the acronym EAFE, which stands for Europe, Australasia and the Far East. Some Canadian investors might want further international exposure to emerging markets, though this region has been a laggard over the past decade.
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For our “Best ETFs” panel, the default core fund in this category was XEF, iShares Core MSCI EAFE IMI Index ETF (got your fill of acronyms yet?). It has one of the lowest MERs in the space at 0.22%, and it is large and liquid enough to ensure tiny bid/ask spreads just about any time the TSX, on which it trades, is open. The runners-up were comparable low-cost index funds from Vanguard and BMO, with Vanguard FTSE Developed All Cap ex North America Index ETF (VIU) getting the edge for having a larger number of constituents. BMO MSCI EAFE Index ETF (ZEA) gets its smaller-stock exposure by holding other ETFs.
In the table below, you’ll find the best international equity ETFs for Canadian investors, as judged by our panel. Slide the columns right or left using your fingers or mouse to reveal more data. You can download the data to your device in Excel, CSV and PDF formats.
| wdt_ID | Fund name | Ticker | Management fee | MER | Holdings | Description |
|---|---|---|---|---|---|---|
| 1 | iShares Core MSCI EAFE IMI Index | XEF | 0.20% | 0.22% | 2,631 | Wide diversification, low tracking error |
| 2 | Vanguard FTSE Developed All Cap ex-North America Index | VIU | 0.20% | 0.23% | 3,835 | Wide market exposure, unhedged |
| 3 | BMO MSCI EAFE Index | ZEA | 0.20% | 0.22% | 777 | Similar to XEF with competitive fee |
| Fund name | Ticker | Management fee | MER | Holdings | Description |
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