For Canadian investors building a globally diversified portfolio, international equity generally refers to stocks domiciled outside of Canada and the United States. In practice, most investors concentrate their core international exposure on developed markets—Europe, Australasia and the Far East (EAFE)—because these regions represent the largest share of global market capitalization and offer broad industry diversification and deep liquidity.
Some investors also choose to add an emerging markets (EM) fund to gain direct exposure to faster-growing economies such as China, India and Brazil. That can make sense for those seeking higher long-term growth potential, but it’s important to remember that many large multinational companies based in Europe, Japan and North America already generate significant sales and growth from developing markets. As a result, investors don’t necessarily miss out on global growth simply by holding internationally diversified developed-market funds.
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MoneySense is an established personal finance magazine that has helped Canadians make informed decisions since 1999. Our editorial team of experienced journalists works with independent personal finance experts and evaluates financial products from major banks, credit unions and card issuers. We aim to compare offerings clearly so readers can choose the best fit for their needs.
Our 2026 picks for best international equity ETFs
This year our panel of judges focused on funds that limit exposure to developed markets outside of North America. The top-ranked choice was Vanguard’s FTSE Developed All-Cap ex-North America Index ETF (VIU). It is notable for its low management expenses relative to many peers, its very broad selection of holdings, and its inclusion of South Korea—home to large industrial and technology companies that some indices classify as emerging markets.
| ETF | Ticker | Mgt. fee | MER | Holdings | Description |
|---|---|---|---|---|---|
| Vanguard FTSE Developed All-Cap ex-North America index ETF | VIU | 0.20% | 0.23% | 3,914 | Tracks FTSE Developed All Cap ex-North America Index, includes South Korea |
| TD International Equity Index ETF | TPE | 0.17% | 0.19% | 908 | Tracks Solactive GBS Developed Markets ex North America Large & Mid Cap CAD Index |
| Vanguard FTSE Developed All-Cap ex-North America index ETF CAD-hedged | VI | 0.20% | 0.22% | 3,733 | CAD-hedged version of VIU that mitigates currency risk for Canadian investors |
Our judges also recommended the TD International Equity Index ETF (TPE), which carries some of the lowest fees among Canadian-traded international equity funds. One panellist highlighted that TPE offers the advantages of a traditional EAFE-style strategy while tracking a lower-cost benchmark, which can be attractive for fee-conscious investors.
In third place was the Canadian-dollar-hedged version of Vanguard’s FTSE Developed All-Cap ex-North America fund (VI). A hedged share class can help reduce the impact of currency fluctuations on returns for Canadian investors, which is an important consideration if you prefer to minimize currency volatility in your portfolio.
Other notable funds that earned an honourable mention were the iShares Core MSCI EAFE IMI Index ETF (XEF) and Vanguard Total International Stock ETF (VXUS) listed in the U.S. These ETFs rank closely behind the top three and remain strong options depending on an investor’s priorities, such as the index tracked, taxation, trading venue and whether or not currency exposure is desired.
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How to choose an international equity ETF: consider the index tracked, total expense ratio (MER), management fee, the breadth of holdings, whether the fund is hedged to Canadian dollars, and where it’s listed and traded. Lower fees can compound into meaningful differences over time, but index coverage and tracking accuracy also matter. Finally, review how an international ETF fits with your overall asset allocation goals, risk tolerance and tax situation.
International equity ETFs can provide efficient exposure to global markets, diversify away from home-country concentration and add industry and geographic balance to a long-term portfolio. For Canadian investors, paying attention to currency exposure, fees and the specific markets included in each fund will help you select the most suitable ETF for your strategy.