There are plenty of reasons to own international stocks in a portfolio. Some investors want foreign stocks in their portfolios to round out their exposure to the global stock market and widen their investment opportunity set. Dan Lefkovitz, strategist with Morningstar Indexes, estimates that U.S. stocks constitute about 58% of the world’s public equity market capitalization, with foreign stocks representing the remaining 42%. But most U.S.-based investors’ allocations to non-U.S. stocks are nowhere near that level.
Others may want to tilt their portfolios toward international stocks after a period of U.S. stock dominance like the one we’ve seen in the past several years. By mid-May 2023, the return of the average U.S. large-blend fund had trounced the return of the average foreign large-blend fund by 6 full percentage points annually over the trailing decade.
But before adding an international fund to your portfolio, double-check that you don’t already have plenty of exposure to international stocks through your existing stock fund holdings. While there’s no “right” allocation to foreign stocks, Morningstar’s Lifetime Allocation Indexes (which you can use to benchmark your asset allocation) suggest up to a near-42% position in non-U.S. stocks, depending on life stage and glide path.
If you find that your portfolio weighting in international stocks is lighter than you’d like, you can turn to our shortlist of the best international stock mutual funds and exchange-traded funds—those funds with at least one share class earning a Morningstar Medalist Rating of Gold and where Analyst Assigned % equals 100%—for a manageable list of ideas to investigate further.
19 Best Large-Cap International Stock Mutual Funds and ETFs to Buy for 2024
These international funds all land in one of Morningstar’s foreign large-cap stock categories and earn our top Medalist Rating of Gold in December 2023.
- American Funds Europacific Growth RERFX
- American Funds International Growth and Income IGAAX
- Artisan International Value ARTKX
- Causeway International Value CIVVX
- Dimensional International Core Equity Market ETF DFAI
- Dodge & Cox International Stock DOXFX
- Fidelity Total International Index FTIHX
- Goldman Sachs GQG Partners International Opportunities GSINX
- iShares Core MSCI Total International Stock ETF IXUS
- MFS International Equity MIEIX
- Oakmark International OAKIX
- State Street Global All Cap Equity ex-US Index SSGVX
- Vanguard FTSE All-World ex-US ETF VEU
- Vanguard FTSE All-World ex-US Index VFWAX
- Vanguard International Dividend Appreciation ETF VIGI
- Vanguard International Dividend Appreciation Index VIAAX
- Vanguard Total International Stock ETF VXUS
- Vanguard Total International Stock Index VGTSX
- WCM Focused International Growth WCMIX
Most investors who want to add foreign stocks to their portfolios can begin—and, in many cases, end—their search with the international stock funds and ETFs on this list. Why? These 19 funds are what many would call “core” international stock funds. International funds that land in one of Morningstar’s foreign large-cap categories tend to focus on companies in Europe, specifically established markets in France, Germany, Switzerland, the Netherlands, Spain, Italy, and the United Kingdom. They often hold significant positions in Asia as well. And although they dabble in emerging-markets stocks, they often cap their exposure to those markets to about 15% of assets.
The best large-cap international stock mutual funds and ETFs list includes a good deal of variety. Solid index funds stand side by side with successful active strategies. Some managers on the list favor value stocks, while others prefer growth stocks—and some funds blend the two. Some lean more heavily than others into emerging-markets stocks, as well.
To choose the best international stock fund for your portfolio from this list, be sure to consult the individual analyst reports for each fund.
6 Best Small- and Mid-Cap International Stock Mutual Funds and ETFs to Buy for 2024
These international funds all land in one of Morningstar’s foreign small/mid-cap stock categories and earn our top Medalist Rating of Gold in December 2023.
- DFA International Small Cap Value DISVX
- DFA International Small Company DFISX
- Dimensional International Small Cap ETF DFIS
- Dimensional International Small Cap Value ETF DISV
- Oakmark International Small Cap OANEX
- Vanguard FTSE All-World ex-US Small Cap ETF VSS
Some investors may choose to craft more nuanced international exposures in their portfolios and therefore supplement a core foreign stock fund with one that focuses on small and midsize companies. Foreign small/mid-cap funds often carry larger emerging-markets positions than large-cap international stock funds.
The best small- and mid-cap international stock mutual funds and ETFs list also includes a mix of actively managed approaches and index funds. Here, too, consult each fund’s report to delve into its specific investment process.
Why Your Portfolio Needs International Stocks
2 Best Diversified Emerging-Markets Stock Mutual Funds and ETFs to Buy
These international funds all land in Morningstar’s diversified emerging-markets stock category and earn our top Medalist Rating of Gold in December 2023.
Like small/mid-cap foreign stock funds, diversified emerging-markets funds play supporting—not core—roles in most investors’ portfolios, if they play any role at all. That being said, some would suggest that adding emerging-markets exposure to your international stock mix is a smart tactical move today: Many well-regarded asset managers expect emerging-markets stocks to outperform both U.S. stocks and the stocks of developed markets during the next decade. But before doing so, double-check your existing exposure to emerging-markets stocks, given that most international funds (and some U.S. stock funds) dabble in developing markets, too.
What Is the Morningstar Medalist Rating?
The Morningstar Medalist Rating is a forward-looking assessment of how well Morningstar expects a mutual fund or ETF to outperform its index after fees over a full market cycle. Funds are rated on a five-tier system: Gold, Silver, Bronze, Neutral, or Negative.
To determine ratings, Morningstar scores funds on three pillars:
- The Parent Pillar analyzes the parent organization in charge of managing the fund.
- The People Pillar evaluates the managers who are responsible for making key decisions regarding the fund.
- The Process Pillar determines whether the strategy a parent organization applies to a fund is both effective and repeatable.
Pillar ratings are either assigned directly by Morningstar’s analysts, indirectly by analysts, or by an algorithm.
Find more details about how the rating is calculated in Morningstar Medalist Rating for Funds.
How to Find More Top International Stock Mutual Funds and ETFs
Of course, there are many other criteria investors can use to find international stock funds and ETFs to buy for the long term. Here are some screening ideas to find more foreign stock funds to research further:
- Investors can expand their search to Gold-rated international stock mutual funds and ETFs whose ratings are not 100% analyst driven by using the Morningstar Investor screener tool. For Investment Type, select mutual fund or ETF. Under Criteria, select international equity as the Asset Class and select one or more Morningstar Categories you’re interested in. In the Ratings section, set the Morningstar Medalist Rating to Gold. You can expand your search beyond Gold-rated funds, too.
- Want to lean into a specific region, such as China or Latin America? Use the Morningstar Investor screener tool, selecting the appropriate Morningstar Category you’re interested in, after setting the Asset Class to international equity.
- Or maybe you’d rather go broad and search for funds that invest in both U.S. stocks and non-U.S. stocks. In the Morningstar Investor screener tool, you’ll still set the Asset Class to international equity, but then you’ll choose one or more Morningstar’s global categories: global large-stock growth, global large-stock value, global large-stock blend, or global small/mid stock.
- No matter the screen you run, use the Manage Data & Columns button in the Morningstar Investor Screener tool (near the gear symbol at the top) to display the data points that matter to you, such as fees, whether a fund is classified as an index fund, risk measures, and more.
