In this article, we discuss 9 Best International Index Funds to Invest In.
Undoubtedly, the US plays host to the largest equity market in the world as home to the largest stock exchanges. Likewise, it is home to the largest companies in the world by market capitalization. Therefore, investors often turn to the US, given the high liquidity always in play when seeking exposure to some of the biggest and emerging market segments.
Over the years, US indices have provided broad exposure to various sectors, from financial services to healthcare, technology, industrials, and even consumer cyclical. However, amid the escalating tariff and trade war pitting the US and its allies or other economies, sentiments in the equity markets are increasingly shifting.
Major US equities and indices have pulled back significantly from record highs after President Donald Trump imposed significant trade tariffs on Canada, China, the EU, and other nations. In the year’s first quarter, the US S&P 500 was down by about 6% as the tech-heavy Nasdaq 100 slid more than 8.1%. The slump came as investors became net sellers concerned by the impact of the trade war waged by the Trump administration.
In contrast, European equities were on a roll, with the EURO STOXX 50 index tracking the 50 largest blue chip stocks in the trading block, soaring 11%. The rally in European equities underscores how the focus is increasingly shifting away from US equities to other markets.
“The first months of 2025 have shown increased investor focus on international investing, with developed markets strongly outperforming their U.S. counterparts,” says Arne Noack, regional investment head of Xtrackers, Americas, at DWS Group.
This superior performance has been fueled by a shift towards international equities, primarily linked to the Trump administration’s growing isolationist stance. A mix of diminished backing for Ukraine and tariffs imposed on crucial trading allies such as Canada has led to a reevaluation of the stability of the U.S. market, which has long been a fundamental aspect of investor trust.
In addition to policy issues, valuations have also influenced this trend. For many years, U.S. stocks have been priced at considerably higher forward price-to-earnings (P/E) ratios than their international counterparts. Now, as those multiples shrink, investors are rethinking their investment strategies.
Likewise, the best international index funds offer a way out of the turmoil in the US equity markets as they offer broad market exposure to some of the biggest companies at some of the lowest costs.
“Adding international stocks to your portfolio can dampen volatility and improve returns, since the U.S. economy and market may face challenges at different times compared to international regions,” says Scott Klimo, chief investment officer at Saturna Capital. “Mitigating currency risk also plays a role, as the U.S. dollar may strengthen or weaken versus other countries at different times.”
Consequently, we have listed some of the best international index funds for investors right now.
Our Methodology
To make the list of 9 Best International Index Funds to Invest In, we scanned the global equity markets. We then settled on the best funds based on a number of factors including market index cost (expense ratio) and long-term performance. Finally, we ranked the index funds in ascending order based on the fund’s expense ratio.
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9 Best International Index Funds to Invest In
9. WisdomTree Japan Hedged SmallCap Equity Fund (NASDAQ:DXJS)
5-Year Total Return: 18.37%
Expense Ratio: 0.580%
WisdomTree Japan Hedged SmallCap Equity Fund (NASDAQ:DXJS) is an index fund that invests at least 80% of its assets in small-cap stocks listed on the Tokyo Stock Exchange. Additionally, the fund seeks to neutralize exposure to fluctuations of the Japanese Yen relative to the US dollar. Consequently, it delivers higher returns than equivalent non-currency hedged investments whenever the Yen weakens against the dollar.
WisdomTree Japan Hedged SmallCap Equity Fund (NASDAQ:DXJS) is a highly diversified small-cap-focused index fund. Industrials stocks account for 23.73% of its total holdings, with Consumer Cyclical at 19.00% and Financial Services at 18.34%. The international index fund has an expense ratio of 0.480% and a 3.27% 12-month yield. It stands out as one of the best international index funds going by its five-year average return of 18.37%.
8. Invesco International Dividend Achievers ETF (NASDAQ:PID)
5-Year Total Return: 13.89%
Expense Ratio: 0.530%
Invesco International Dividend Achievers ETF (NASDAQ:PID) is an international index fund targeting investors who are eyeing exposure to some of the top global depository receipts listed on the London Stock Exchange and American depository receipts. The index fund does not include any US or ordinary stocks. Communication services sector stocks account for 19% of the fund’s holdings, followed by utility stocks at 14.58% and energy stocks at 13.89%.
With a 3.68% 12-month yield, Invesco International Dividend Achievers ETF boasts one of the lowest expense ratios at 0.530%. Its 5-year average return stands at 13.89%
7. Xtrackers MSCI EAFE Hedged Equity ETF (NYSEARCA:DBEF)
5-Year Total Return: 14.08%
Expense Ratio: 0.350%
Xtrackers MSCI EAFE Hedged Equity ETF (NYSEARCA:DBEF) is a low-cost index fund that seeks results that correspond to the MSCI EAFE US Dollar Hedged Index, which measures the equity market performance of developed markets outside the US and Canada. The index fund mostly focuses on investment holdings in Europe, Australasia, and the Far East.
Xtrackers MSCI EAFE Hedged Equity ETF relies on a passive or indexing investment approach while tracking developed market performance and mitigating exposure to fluctuations between the U.S. dollar’s value and the countries’ currencies. With a low expense ratio of 0.350%, the fund boasts a 1.24% 12-month yield. It has also generated an average of 14.08% over the past five years.
6. SPDR EURO STOXX 50 ETF (NYSEARCA:FEZ)
5-Year Total Return: 16.31%
Expense Ratio: 0.290%
SPDR EURO STOXX 50 ETF (NYSEARCA:FEZ) stands out as one of the best international index funds for gaining exposure to the top 50 blue chip stocks in the European Union. The fund seeks investment results that track the performance of the EURO STOXX 50 stocks while employing a sampling strategy, therefore not requiring purchasing all of the securities represented in the index.
In addition, it offers exposure to the financial services sector at 21.11%, Industrials at 17.81%, and Technology at 16.20%. The index fund also offers exposure to SAP SE, ASML Holding NV, Siemens AG, and Allianz SE. While boasting a low expense ratio of 0.290%, the fund has generated an average return of 16.31% over the past five years.
5. IShares ESG Aware MSCI EAFE ETF (NASDAQ:ESGD)
5-Year Total Return: 11.61%
Expense Ratio: 0.21%
IShares ESG Aware MSCI EAFE ETF (NASDAQ:ESGD) is an international index fund that tracks the results of an index composed of mid and large-cap companies in various sectors, excluding US and Canadian companies. Additionally, it is an index fund that targets investors looking to invest in companies that adhere to positive environmental, social, and governance principles of ESG.
Consequently, it is an ideal index fund for investors eyeing ESG investments in Europe, Australia, and Asia. Financial services stocks account for the biggest share of the Index, holding at 23.52%, with Industrials coming second at 16.70%. Healthcare and Technology stocks account for 11.33% and 10.34% of holdings, respectively. Over the past 12 months, the fund has generated an average yield of 3.02% with a low expense ratio of 0.210%. IShares ESG Aware MSCI EAFE ETF (NASDAQ:ESGD) five-year average return is 11.61%.
4. Vanguard Total International Stock Index Fund Admiral Shares (NASDAQ:VTIAX)
5-Year Total Return: 10.54%
Expense Ratio: 0.09%
Vanguard Total International Stock Index Fund Admiral Shares (NASDAQ: VTIAX) is one of the best international index funds that offer exposure to companies in developed and emerging markets, excluding the United States. It relies on an indexing investment approach that tracks the performance of the FTSE Global All Cap ex US Index.
With significant exposure to financial services, industrial technology, and consumer cyclical stocks, the index has exposure to tech giants, including Taiwan Semiconductor Manufacturing Co Ltd, Tencent Holdings Ltd, and Alibaba. Its net expense ratio stands at 0.09% and a five-year return of 10.54%.
3. Vanguard European Stock Index Fund (NASDAQ:VEUSX)
5-Year Total Return: 13.58%
Expense Ratio: 0.08%
Vanguard European Stock Index Fund (NASDAQ:VEUSX) is one of the best international index funds tailored to offer low-cost exposure to companies listed in major European Stock Exchanges. The index fund deploys an indexing investment approach to unlock value in the European index market.
The index fund mostly invests in the Financial Services sector, accounting for 21.48% of the total portfolio, followed by Industrials at 18.12% and Healthcare at 13.59%. The fund offers exposure to SAP SE, Nestle SA, and ASML Holding. With a low expense ratio of 0.08%, the index fund has generated an average return of 13.58% over the past five years.
2. Fidelity International Index Fund (NASDAQ:FSPSX)
5-Year Total Return: 11.77%
Expense Ratio: 0.035%
Fidelity International Index Fund (NASDAQ:FSPSX) is an investment fund that invests in foreign stock markets. It invests at least 80% of its assets in stocks included in the MSCI EAFE, representing the performance of foreign stock markets. The Eurozone accounts for the biggest share of its total holdings, with Japan coming second at 21.88%.
The international index fund is heavily concentrated in financial services, accounting for 22.29% of its total holdings, with Industrials coming second at 17.26% and the Healthcare sector third at 12.63%. The fund also relies on statistical sampling techniques based on capitalization industry exposures and dividend yield to generate value through its holdings. Fidelity International Index Fund (NASDAQ:FSPSX) boasts a low expense ratio of 0.035% and a five-year average return of 12.14%.
1. Fidelity ZERO International Index Fund (NASDAQ:FZILX)
5-Year Total Return: 11.08%
Expense Ratio: 0.00%
Fidelity ZERO International Index Fund (NASDAQ:FZILX) is one of the best international index funds to invest in as it seeks to provide investment results that align with the total return of foreign developed and emerging stock markets. The index performance reflects the performance of non-US large and mid-cap stocks while leveraging statistical sampling techniques based on market capitalization, industry exposures, dividend yield, and earnings growth.
Most of the fund’s holdings are in the Eurozone, accounting for 20.27% of the total portfolio, with Japan stocks accounting for 16.56% and Emerging Asia at 11.96%. With financial services Industrials and technology stocks accounting for the biggest share of holdings, the fund offers exposure to Taiwan Semiconductor Manufacturing Co Ltd, Tencent Holdings Ltd, and ASML Holding NV. The fund has no expense ratio and boasts of a five-year average return of 11.08%.
While we acknowledge the potential of Fidelity ZERO International Index Fund (NASDAQ:FZILX) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than FZILX but that trades at less than 5 times its earnings check out our report about this cheapest AI stock.
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