Investing Education: International ETFs

Investing Beyond Borders: Why International ETFs Belong in Your Portfolio

A guide for young investors exploring global diversification and how international ETFs can offer exposure, opportunity, and risk balance.

“Great companies don’t just live in your home country — and great returns don’t either.”

Why Look Beyond the U.S. Market?

If you’re just getting started investing, chances are most of your exposure is in U.S.-based stocks or ETFs. And that makes sense — U.S. companies like Apple, Microsoft, and Nvidia dominate headlines and index weightings.

But here’s the catch:

The U.S. makes up less than 60% of global equity markets.
The other 40%? Spread across Europe, Asia, emerging markets, and beyond.

And those markets don’t always move in sync.

A New Reason for Global Diversification: The Tariff Shock

On April 2, 2025, Trump’s aggressive tariff announcements sent shockwaves through financial markets. While there may be negotiation or reversal in some areas, the perception of volatility and unpredictability has already taken root.

Many global leaders, analysts, and institutions now view these moves — and broader U.S. political shifts — as signals that the U.S. market may not offer the same stability it once did.

Countries like China and key European nations are already reassessing their reliance on the U.S. economy. This shift may spark new flows into alternative economies and stock markets.

For decades, the S&P 500 has been treated as the global investor’s anchor — the “default” choice for large-scale capital.

But that dominance may now be questioned. And young investors should take note.

Benefits of International Exposure

1. Diversification

When U.S. markets go through a downturn, other regions might hold up better — or even rally. International ETFs can reduce portfolio volatility.

2. Sector Access

Want exposure to commodities, manufacturing, or global banks? Many international ETFs provide access to sectors underrepresented in U.S. indexes.

3. Currency and Inflation Hedges

Owning assets in other currencies can help offset dollar-specific risks or inflation pressures.

4. Valuation Differences

Some international stocks — especially in developed or emerging markets — may be trading at more attractive valuations.

5. Geopolitical Counterbalance

If you’re concerned that U.S. policy swings are becoming too sharp or unpredictable, investing beyond borders gives you strategic balance.

Popular International ETF Examples

VEA – Developed Markets (ex-US)
VXUS – Total International Stock Market
VWO – Emerging Markets
EWJ – Japan
EWZ – Brazil
IEFA – Developed markets excluding North America
IXUS – Global (ex-US)

Most of these are low-cost, index-based ETFs with diversified exposure.

What to Watch Before You Buy

Currency Risk: If the U.S. dollar strengthens, your international returns might shrink (even if local stocks rise).
Geopolitical Risk: Political or regulatory events can hit foreign markets differently.
Tax Treatment: Some international ETFs may come with different tax implications — especially with foreign dividends.
Correlation to U.S. markets: Not all international ETFs provide true diversification. Do some research to see how they move relative to U.S. indexes.

Where It Fits in Your Portfolio

You don’t need to go all-in on global exposure.
Even a 10–20% allocation to international ETFs can make your portfolio more resilient and opportunity-rich.

Consider:

Using global ETFs inside a Roth IRA or tax-advantaged account
Pairing U.S. growth with international value
Rebalancing annually based on performance gaps

Global Thinking = Risk Mitigation = Smarter Investing

Recent political and economic shifts — including the volatility introduced by tariff-related tensions — show that relying entirely on U.S. markets might not be as safe as it once seemed.

You don’t need to be a currency trader or global economist to invest internationally. ETFs make it simple, accessible, and cost-effective.

In a world that’s increasingly connected — but economically diverse — international ETFs can help you capture more opportunity with less concentrated risk.