International Index Funds Explained in Simple Terms

International index funds are a great way to diversify your portfolio and gain exposure to international markets. They allow you to invest in a broad range of stocks from around the world.

These funds track a specific market index, such as the MSCI EAFE Index, which covers developed markets outside of North America and Europe. This means they hold a representative sample of the underlying securities in that index.

By investing in an international index fund, you can tap into the growth potential of emerging economies and developed markets. This can help spread out risk and increase potential returns.

International index funds typically have lower fees compared to actively managed funds, which can save you money over time.

Index funds are a type of investment that tries to track the performance of a specific benchmark index.

They do this by holding a collection of stocks or other securities that make up the index, which can be a mix of domestic and international investments.

Index funds are often low-cost, which means you can expect to pay lower fees compared to actively managed funds.

This is because index funds don't have a fund manager trying to pick and choose individual stocks to beat the market.

Some index funds are designed to track a specific geographic region, such as the US or international markets.

International index funds, in particular, have a global scope as their focus, which can expose you to a wide range of risks, including currency fluctuations.

These risks can be significant, so it's essential to understand them before investing in an international index fund.

Index funds can be broadly categorized into two main types: domestic and international.

Domestic index funds track the performance of a specific market index, such as the S&P 500, which represents the top-performing US stocks.

International index funds, on the other hand, track a broader market index that includes stocks from countries outside the investor's home country.

Total Stock Admiral Shares offer a unique investment opportunity. The Vanguard Total International Stock Index Fund Admiral Shares (VTIAX) is one such fund, with a massive AUM of $412.1 billion.

This fund tracks the FTSE Global All Cap ex U.S. Index and has a relatively low Net Expense Ratio of 0.12%. The fund's minimum investment requirement is $3,000, making it accessible to a wide range of investors.

The fund's allocation is spread across various regions, with Japan, the United Kingdom, Canada, France, and China making up the top five market allocations. Europe accounts for 40.10% of the fund's total regional allocation, while the Pacific region follows with 27.30%.

Here are the top 5 market allocations of the Vanguard Total International Stock Index Fund Admiral Shares (VTIAX):

The 10-year return for the fund is 4.18%, slightly lower than the benchmark index's 4.27% return during the same period.

Fidelity Real Estate offers a unique investment opportunity that's worth exploring. The Fidelity International Real Estate Fund (FIREX) is a great example of this, providing everyday investors with international exposure to global real estate investments.

FIREX is primarily invested in Japan, Europe, the United Kingdom, and Hong Kong, a region that carries some geopolitical risks due to conflicts with mainland China. However, its diverse regional investments make it less susceptible to significant impact from political tensions within Hong Kong.

The fund boasts an impressive 10-year average return of 7.8%, making it a solid pick based on its historical average.

The Nysemkt: Vwo index fund is a type of international index fund that tracks the performance of the MSCI EAFE Index, which represents the performance of foreign developed-market stocks.

This fund has an AUM of $48.3 billion and a NAV of $50.01 as of March 25, 2024. Its Net Expense Ratio is 0.035%.

The fund uses sampling techniques to attain investment results similar to those of the underlying index, providing a diversified international portfolio at a very low cost.

European stocks have the largest allocation at 65.94%, while Japanese equities account for 22.93% of the fund's assets.

The fund's top 10 holdings account for only 14.92% of its assets, indicating a widely diversified portfolio.

Its 10-year return is 4.53%, slightly lower than the benchmark's 4.60% return during the same period.

Investing in Index Funds is a straightforward process. You can invest in International Index mutual funds on ET Money, a popular investment platform.

To get started, you'll need to register online on the ET Money app or website. Once you're registered, head to the Mutual Funds section and choose the International Index fund you want to invest in.

International Index Funds have delivered impressive returns in the past year, with an average of 33.03% p.a. returns. Their 3 and 5 year annualized returns are 20.79% and 24.52% p.a. respectively.

Here are the top 5 International Index funds you can invest in 2025:

Investing in index funds can be a good investment option, but it depends on your investment goals and strategies. Whether international index funds are a good investment depends on your investment goals, strategies, and capital pool.

You can mitigate your risk by diversifying your exposure to international stocks, which can provide a good return on your investment. Diversifying your exposure to international stocks can mitigate your risk.

International index funds can tap into opportunities in foreign markets, but not every index fund is built the same. Some international funds expose your investments to special risks, such as geopolitical conflicts and civil wars.

To optimize your portfolio for the best investment results while avoiding significant losses, scrutinize your potential investments. Prioritize index funds with a solid track record of producing returns for their investor base.

Low expense ratios can help you avoid paying huge sums on your investments. The percentage you pay in expense ratios can add up to a lot, especially if you make a substantial investment into a fund.

Here are some international index funds with low expense ratios:

Keep in mind that investing in international index funds requires careful consideration of the foreign markets you invest in. You need to pick the foreign markets you dive into wisely to avoid investing in highly unstable locations.

To invest in Index Funds, you can start by registering online on ET Money's app or website. You can also head to the Mutual Funds section and choose the Index fund you want to invest in.

The process is quite straightforward. Click on "invest" and choose the amount and mode of investment, whether it's a Systematic Investment Plan (SIP) or a lump sum.

You'll need to provide your KYC details, including your PAN number and bank details, to complete your investment. This is a one-time process that's essential for investing in Index Funds.

If you're new to investing, you might want to consider starting with a smaller amount and gradually increasing it over time. This can help you get a feel for the process and manage your risk.

International Index Funds have delivered impressive returns, with an average of 33.03% p.a. in the last 1 year. This is a significant return that can help your investments grow over time.

Liquidity is crucial when investing in index funds. You want to be able to buy and sell shares easily without incurring significant costs.

Investors can make purchases or sales in traditional mutual funds at any time of day, confident in getting the closing net asset value at the market close. This is not the case with exchange-traded funds (ETFs), which can introduce the added cost of the bid-ask spread every time you buy or sell shares.

Schwab and Vanguard have reasonably solid followings, which helps maintain a fairly regular $0.01 per share bid-ask spread in most cases. This is good news for investors who use these ETFs.

The Vanguard Total International Stock Index Fund Admiral Shares (VTIAX) has an impressive AUM of $412.1 billion, making it one of the largest international index funds out there.

Its net expense ratio is a low 0.12%, and it tracks the FTSE Global All Cap ex U.S. Index.

With a minimum investment requirement of $3,000, this fund is suitable for investors who can commit to a larger investment.

Here's a breakdown of the top market allocations for VTIAX:

The Vanguard Developed Markets Index Fund Admiral Shares (VTMGX) has a significantly lower net expense ratio of 0.07% and a turnover ratio of 2.7%, making it highly tax-efficient for investors.

The Northern Global Sustainability Index Fund is an investment option that focuses on companies that meet high Environmental, Social, and Governance (ESG) standards. This fund is a great choice for investors who want to align their portfolio with their values.

The fund invests in large-cap and mid-cap stocks across various developed markets, including Australia, Canada, Denmark, France, Switzerland, Germany, and the United Kingdom. It also has some exposure to the United States.

One of the key features of this fund is its expense ratio of 0.3%, which is relatively low compared to other funds. This means that investors pay a smaller percentage of their investment as an annual management fee.

The fund's primary focus on ESG standards makes it an attractive option for investors who want to support companies that prioritize sustainability. By investing in this fund, you're supporting companies that champion global ESG standards.

The Northern Global Sustainability Index Fund is a great way to diversify your portfolio while also making a positive impact on the environment and society.

The Vanguard European Stock Index, also known as VEUSX, is a great option for investors looking to gain exposure to the European market.

This fund tracks the returns measured by the FTSE Developed Europe All Cap Index, which features 1,276 European stocks. The fund boasts an extremely attractive 0.10% expense ratio, making it a cost-effective choice for investors.

The healthcare sector constitutes the fund's primary focus, but it also maintains large allocations toward the financial services and industrial sectors. This diversification can help reduce risk and increase potential returns.

In 2021, the fund returned 16.19%, which is a decent percentage gain. However, it's essential to remember that past performance is no guarantee of future results.

VEUSX requires a minimum investment of $3,000, which may be off-putting to some investors looking to make a smaller initial investment. However, the fund's potential returns and low expense ratio make it worth considering.

Here's a quick snapshot of the fund's key features: