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.

Low-cost global equity exposure

iShares Core MSCI All Country World ex Canada Index ETF (TSE:XAW)

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.

  • Broad Market Coverage – Includes over 9,000 stocks from developed and emerging markets.
  • Low Expense Ratio – Competitive management fees compared to similar global ETFs.
  • Strong U.S. Exposure – U.S. equities make up a significant portion, benefiting from their historical market performance.
  • Diversification Across Sectors – Covers various industries, reducing single-sector risk.
  • Ideal for Long-Term Growth – Designed for investors looking to complement a Canada-heavy portfolio with international exposure.
  • U.S. Market Performance – As the largest component, U.S. stock movements impact overall ETF returns.
  • Emerging Market Growth – China, India, and other economies could drive performance.
  • Interest Rate Changes – Global central bank policies can impact equity markets.
  • Currency Fluctuations – International exposure means returns can be impacted by exchange rates.
  • Geopolitical Risks – Tensions in major markets like China and Europe can affect returns.
  • U.S. Market Concentration – Heavy allocation to U.S. stocks could be a risk if the market underperforms.

Full market-cap exposure across global stocks

Vanguard FTSE Global All Cap ex Canada Index ETF (TSE:VXC)

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.

  • All-Cap Exposure – Includes small-, mid-, and large-cap stocks for full market representation.
  • Well-Diversified Portfolio – Covers over 9,000 companies across multiple industries.
  • Low-Cost Vanguard Fund – Competitive fees for global exposure.
  • Emerging Markets Allocation – Provides exposure to high-growth economies.
  • Great Core Holding – Suitable for investors seeking a one-stop international solution.
  • Small-Cap Performance – Exposure to smaller companies adds growth potential.
  • Emerging vs. Developed Markets – Shifting global economic power may impact returns.
  • Sector Leadership – Tech, healthcare, and financials are key components.
  • Market Volatility – Small-cap exposure can introduce additional risk.
  • Global Economic Slowdowns – A downturn in major markets would affect performance.
  • Currency Risks – International investments are subject to exchange rate fluctuations.

Developed market equity exposure outside North America

iShares Core MSCI EAFE IMI Index ETF (TSE:XEF, TSE:XEF.U)

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.

  • Excludes North America – Focuses on international developed markets.
  • Large-, Mid-, and Small-Cap Exposure – Provides full market coverage.
  • Low Cost & Efficient – Offers competitive fees with a broad global reach.
  • Currency Hedging Option – Available in CAD-hedged and unhedged versions.
  • Diversified by Country and Sector – Significant exposure to financials, industrials, and healthcare.
  • European Economic Growth – Key markets like Germany and the UK influence ETF performance.
  • Japan’s Market Reforms – Japanese corporate governance changes could boost returns.
  • Interest Rate Environments – Central bank policies impact global developed markets.
  • Currency Fluctuations – Exchange rate movements affect returns.
  • Geopolitical Uncertainty – European and Asian political shifts can influence performance.
  • Limited U.S. Exposure – Missing out on U.S. market strength could be a drawback.

Low-cost broad international equity exposure

TD International Equity Index ETF (TSE:TPE)

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.

  • Excludes North America – Ideal for those already holding U.S. and Canadian ETFs.
  • Developed Market Stability – Focuses on established economies with strong regulations.
  • Large- and Mid-Cap Focus – Prioritizes more stable, mature companies.
  • Low-Cost Investment – Offers broad diversification with a low management fee.
  • Efficient International Diversification – Covers major markets such as Japan, Germany, and the UK.
  • European Market Performance – Heavily influenced by the Eurozone economy.
  • Asia-Pacific Growth – Economic trends in Japan, Australia, and South Korea matter.
  • Impact of Inflation – Rising prices could affect company profitability and ETF performance.
  • Limited Growth Exposure – Lack of emerging market investments may limit upside potential.
  • Currency Volatility – Exchange rate swings could impact performance.
  • Sector Concentration – Financials and industrials are major holdings, which could introduce risks.

Dividend-focused international equity exposure

BMO International Dividend ETF (TSE:ZDI)

ZDI invests in dividend-paying stocks from international developed markets. It emphasizes income generation while maintaining broad diversification outside North America.

  • Focus on Dividend Payers – Targets high-quality companies with stable dividends.
  • Global Developed Market Exposure – Provides diversification across Europe and Asia.
  • Defensive Characteristics – Dividend stocks tend to be more resilient in downturns.
  • Currency Hedged – Protects against foreign exchange fluctuations.
  • Income-Oriented Strategy – Suitable for income-focused investors.
  • Dividend Growth Trends – Companies with strong balance sheets may continue raising dividends.
  • Interest Rate Effects – Higher rates could impact dividend stock valuations.
  • European & Asian Markets – Performance in these regions will influence overall returns.
  • Dividend Sustainability – Economic downturns may pressure payouts.
  • Limited Growth Stocks – Focus on income may reduce exposure to high-growth companies.
  • Sector Overweighting – Financials and utilities often dominate dividend ETFs.

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.

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