The Top International ETFs in Canada for February 2025
Key takeaways
Global Diversification Without Canada Exposure – These ETFs provide international exposure while excluding Canadian stocks, making them great complements for Canadian investors.
Variety in Investment Approaches – While some ETFs focus on broad global markets, others target specific regions or dividend-paying companies.
Currency and Regional Risks – Investing internationally introduces currency fluctuations, geopolitical risks, and economic variations across markets.
One ETF I like way better than the ones on this list.As Canadians, we love to keep our investments inside Canada. Buying Canadian equities or Canadian ETFs allows us to do a few things.
For one, we can keep our currency in Canadian dollars. And secondly, we can own businesses we are more familiar with, which makes us more comfortable regarding our investments.
However, being overexposed to Canada can be detrimental for investors, as the Canadian markets are heavily exposed to the financial, oil and gas, and material sectors. There are several ETFs that cater to these types of markets like gold ETFs or Canadian bank ETFs. However, these sectors are cyclical and struggle to put up long-term outperformance.
As a result, we should be looking to add international equities for diversification. This doesn’t necessarily mean targeting an emerging market like China or India. It could simply mean adding US stocks or a US Index ETF to our portfolios.
Are international ETFs a good investment?
International ETFs are a strong investment for those seeking exposure outside of Canada. Yes, you will pay a management fee to own these ETFs. However, gaining exposure to particular markets, such as S&P 500 ETFs, or even the global market in a single click via an ETF is often viewed as a large benefit of international ETFs.
Many of these funds are not the highest yielding. However, they have the chance for capital gains and an increase in unit value.
In this article, I’ll review some of the best international ETFs you can watch for exposure to the United States and globally. They’re strong options for a well-balanced ETF portfolio.
What are the best international equity ETFs in Canada?
Low-cost global equity exposure
iShares Core MSCI All Country World ex Canada Index ETF (TSE:XAW)
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This ETF provides exposure to a broad range of global stocks by tracking the MSCI ACWI ex Canada Index. It includes companies from both developed and emerging markets, excluding Canada, making it a strong choice for Canadian investors seeking diversification.
Full market-cap exposure across global stocks
Vanguard FTSE Global All Cap ex Canada Index ETF (TSE:VXC)
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VXC provides exposure to global large-, mid-, and small-cap stocks outside of Canada. It tracks the FTSE Global All Cap ex Canada Index, offering diversified holdings in both developed and emerging markets.
Developed market equity exposure outside North America
iShares Core MSCI EAFE IMI Index ETF (TSE:XEF, TSE:XEF.U)
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XEF provides exposure to developed markets in Europe, Australasia, and the Far East (EAFE), excluding the U.S. and Canada. It tracks the MSCI EAFE IMI Index and offers international diversification beyond North America.
Low-cost broad international equity exposure
TD International Equity Index ETF (TSE:TPE)
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TPE tracks the Solactive GBS Developed Markets ex North America Large & Mid Cap CAD Index. It offers diversified exposure to developed economies outside of Canada and the U.S., making it an attractive complement for investors with North American-heavy portfolios.
Dividend-focused international equity exposure
BMO International Dividend ETF (TSE:ZDI)
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ZDI invests in dividend-paying stocks from international developed markets. It emphasizes income generation while maintaining broad diversification outside North America.
What is the difference between a global ETF and US ETF?
Global exchange-traded funds that are ex-US or even ex-North America means that they will contain stocks that are located outside of the United States or North America. In contrast, a US ETF will be an international ETF that includes stocks located in the United States and worldwide, or possibly even only stocks located in the United States.
It is important that you investigate the underlying allocations to each specific country before choosing an ETF, as it can have a large impact on your overall returns and portfolio makeup.
Is it a good idea to invest overseas?
This is all a matter of personal preference. Some choose to invest overseas and expand their portfolios in terms of geographical diversification. And on the other hand, some people choose to invest solely in North American stocks due to the better stability when it comes to North American markets.
So, the decision to invest overseas is all dependent on the individual and their risk tolerance.
What are the risks associated with international equity investments?
International equity investments typically contain more risk and uncertainty than those from North American markets. This is because investing in emerging market ETFs, European markets, or international markets exposes investors to geopolitical risks, currency risks, and many other risk elements.
If you invest in international equities, be sure you are doing so with a portfolio allocation you are comfortable with.