The panel was in favor of retaining our three international ETF All-stars from previous years but also decided to add two new ones, both from Vanguard. The returning picks include the two from BlackRock: the iShares Core MSCI All Country World ex Canada Index ETF (XAW) and the iShares Core MSCI EAFE IMI Index ETF (XEF.) Also back is Vanguard’s Emerging Markets ETF (VEE).
Best international ETFs – The list
|ETF Name||Ticker||Management Fee||MER||# of Holdings||Description|
|iShares Core MSCI All Country World ex Canada Index ETF||XAW||0.20||0.22||7881||Global all-cap fund that's lower cost and tax efficient|
|(NEW!) Vanguard FTSE Global All Cap ex Canada Index ETF||VXC||0.25||0.27||10,363||Prefer one-stop international funds to picking standalone emering and international ETFs|
|iShares Core MSCI EAFE IMI Index ETF||XEF||0.2||0.22||2514||Broad coverage of Europe, Japan & Australia|
|Vanguard FTSE Emerging Markets All Cap Index ETF||VEE||0.23||0.24||4741||Emerging Markets index that tracks China A shares|
|(NEW!) Vanguard FTSE Developed All Cap ex North America Index ETF||VIU||0.20||0.23||3723||More diversied than XEF, similarly tax efficient|
A new addition this year is VXC, the Vanguard FTSE Global All Cap ex Canada ETF. It’s based on the FTSE Global All Cap ex Canada China A inclusion index, a market-cap weighted index of large, mid- and small-cap stocks in developed and emerging markets, but excluding Canada. (Most Canadians will already have plenty of domestic exposure elsewhere). PWL’s Ben Felix likes the broader diversification of VXC. Still, he says the fund is hurt a bit by its structure, which provides international equity exposure through US-listed ETFs.
Also new this year is VIU, the Vanguard FTSE Developed All Cap ex North America Index ETF. As the name suggests, it excludes North America, which again makes this a good fund for diversifying beyond the many Canadian and American stocks investors are already likely to own, whether individually or through funds. And as our panelists noted, that makes VIU more diversified than XEF, which is focused on Europe, Japan and Australia. It is market-cap weighted and as tax efficient as XEF.
As was the case last year, XAW remains a popular choice. Robb Engen likes both XAW and VXC as all-world ex-Canada options. “We prefer these one-stop international funds to picking standalone emerging market and international ETFs. XAW gets the nod due to structure and lower fees.”
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