7 Best Mutual Funds for International Investing
These Non-U.S. Funds Offer a Range of Risk and Reward
Smart investors know that investing in international stocks can be a smart move in building a diversified portfolio. With that in mind, we've compiled some of the top international mutual funds, including index funds for more conservative investors and emerging markets funds for more aggressive investors.
Mutual funds that invest in international stocks often have more market risk than mutual funds that invest in U.S. stocks. International stocks provide diversification to a portfolio, but many investors are smart to keep the allocation to somewhere between 10-20%.
Here are some of the top international index funds to explore investing in.
Best International Index Funds
Index funds can be a good way to get broad and diversified exposure to a large segment of foreign markets at a low cost.
Vanguard Total International Stock Index (VGTSX)
For broad exposure to foreign stocks in both developed and emerging markets, it's tough to beat VGTSX. The fund tracks the FTSE Global All Cap ex U.S. Index, which consists of 7455 non-U.S. stocks. The expense ratio for VGTSX is a low 0.17%. As of July 2020, VGTSX is closed to new investors, but keep an eye on it in case it reopens.
Fidelity International Index Fund (FSPSX)
This is another top-notch international index fund that can provide broad and cheap exposure to foreign stocks. FSPSX tracks the MSCI EAFE index, which consists of more than 930 non-U.S. stocks across 21 developed markets. The expense ratio for FSPSX is a low 0.035%, and it does not have an investment minimum.
Vanguard European Stock Index (VEUSX)
This may be the best index fund for buying European stocks. When you invest in index funds, you're aiming stick close to the index, which this fund has done in the past. VEUSX tracks the FTSE Developed Europe All Cap Index, which consists of 1318 European stocks. The expense ratio is a low 0.10%, and the minimum initial investment is $3,000.
Best Funds for Emerging Markets
For investors willing to take a higher level of risk for the possibility of higher returns, there are aggressive stock fund choices, such as those investing in emerging markets and/or small- and mid-cap stocks of non-U.S. companies.
Fidelity Total Emerging Markets Fund (FTEMX)
This fund invests mostly in emerging markets stocks, but it also invests in emerging markets bonds. Therefore, investors get a balance of stocks and bonds in a fund that has historically seen above-average performance. The expense ratio of 1.14% is fairly average for emerging markets mutual funds, and it doesn't have a minimum initial investment.
Matthews Emerging Asia Fund (MEASX)
If you want a top-rated fund that concentrates its holdings in Asia, MEASX is one of the best funds for the job. Matthews Asia is a mutual fund company that specializes in Asian stocks, which means they have experience and knowledge of investing in countries like China, India, and the Philippines. The expense ratio of 1.42% is above average for emerging markets mutual funds, but the experienced management team may be worth the premium. The minimum initial investment is $2,500.
Wasatch International Opportunities (WAIOX)
If you're willing to take even more risk, you might want to consider investing in a fund like WAIOX that invests in smaller international companies. Investing in smaller companies can turn into high long-term returns but, as always, there are no guarantees of this. But based on history, WAIOX delivers in terms of category-beating performance. The expense ratio of 2.09% is high for its category, but the returns could be worth the cost. The minimum initial investment is $2,500.
Fidelity International Small-Cap Fund (FISMX)
Investors wanting to concentrate primarily on small-cap emerging markets stock should take a close look at FISMX. Like the Wasatch fund, the Fidelity International Small-Cap Fund has historically produced high returns compared to other emerging market funds. However, FISMX has a lower expense ratio of 1.19%, and there is no minimum initial investment.
Disclaimer: The Balance does not provide tax, investment, or financial services and advice. The information is being presented without consideration of the investment objectives, risk tolerance or financial circumstances of any specific investor and might not be suitable for all investors. Past performance is not indicative of future results. Investing involves risk including the possible loss of principal.
U.S. Securities and Exchange Commission. "International Investing." Accessed July 3, 2020.
The Vanguard Group. "Vanguard Total International Stock Index Fund Investor Shares (VGTSX)." Accessed July 3, 2020.
Fidelity Investments. "Fidelity International Index Fund." Accessed July 3, 2020.
The Vanguard Group. "Vanguard European Stock Index Fund Admiral Shares (VEUSX)." Accessed July 3, 2020.
Fidelity Investments. "Fidelity Total Emerging Markets Fund." Accessed July 3, 2020.
Matthews Asia. "Matthews Emerging Asia Fund." Accessed July 3, 2020.
Morningstar. "Matthews Emerging Asia Investor MEASX." Accessed July 3, 2020.
Fidelity Investments. "Wasatch International Opportunities Fund Investor Class." Accessed July 3, 2020.
Fidelity Investments. "Fidelity International Small Cap Fund." Accessed July 3, 2020.