How to Invest in International Stocks and ETFs in 2026

Investing only in US stocks means putting 100% of your portfolio in one country, one currency, and one economic cycle. The US represents roughly 60% of global stock market value, which means skipping international stocks is skipping 40% of the investable world entirely.

International stocks give your portfolio exposure to faster-growing economies, different industries, and companies you cannot buy on US exchanges. They also protect you when US markets underperform, as they have in several extended periods throughout history.

This guide covers exactly how to invest in international stocks in 2026: the best ETFs to use, how much of your portfolio to allocate abroad, the difference between developed and emerging markets, and what to watch out for along the way.

Should You Invest in International Stocks?

This is the first question most investors ask, and the honest answer is: probably yes, but the exact amount is debatable.

The Case For International Stocks

Diversification that actually works. US and international markets do not always move together. When US stocks struggled from 2000 to 2010 (often called the “lost decade”), international stocks significantly outperformed. When you hold both, poor performance in one region is partially offset by better performance in another.

Access to global growth. Many of the world’s fastest-growing economies are outside the US. Countries like India, Brazil, Vietnam, Indonesia, and others have younger populations, expanding middle classes, and economic growth rates that dwarf US GDP growth. Emerging market stocks give you exposure to that growth.

Valuation advantage. International stocks have historically traded at lower price-to-earnings ratios than US stocks. Whether that discount reflects genuine risk or genuine opportunity is debated, but cheaper valuations mean you are buying more earnings per dollar invested.

Currency diversification. When you hold stocks denominated in euros, yen, or British pounds, you benefit if those currencies strengthen against the dollar. This can add or subtract returns depending on currency movements.

The Honest Counterarguments

US stocks have dominated for 15 years. From 2010 to 2024, US stocks significantly outperformed international stocks. Investors who went heavy international during this period underperformed those who stayed US-focused. Past performance does not guarantee future results in either direction, but US stock dominance has been extended and dramatic.

Many US companies are already global. Apple generates more than half its revenue outside the US. Coca-Cola sells in 200 countries. McDonald’s is everywhere. Owning US large-cap stocks already gives you significant exposure to global economies through the companies themselves, not just through the markets they are listed on.

Higher costs and complexity. Some international funds have slightly higher expense ratios than their US counterparts. Emerging markets in particular can be more volatile and carry political and regulatory risk that domestic stocks do not.

Bottom line: Most financial advisors and the evidence from long-term studies support holding some international exposure, typically 20% to 40% of equities. Going to zero international is a concentrated bet on the US continuing to outperform. Going to 50% or more international is a concentrated bet the other direction. A balanced middle ground is generally sensible.

Developed Markets vs Emerging Markets: The Key Distinction

International stocks fall into two main buckets that behave very differently.

Developed Markets

Developed markets include economically mature countries with stable governments, strong rule of law, and liquid financial markets. The major developed market regions are:

• Europe: United Kingdom, Germany, France, Switzerland, Netherlands, Sweden, and others
• Asia-Pacific developed: Japan, Australia, South Korea, Hong Kong, Singapore
• Canada

Developed market stocks tend to be more stable than emerging markets, with lower volatility and more predictable regulatory environments. They also tend to grow more slowly, since these economies are already mature.

Emerging Markets

Emerging markets include countries with faster-growing but less stable economies. Major emerging markets include:

• Asia: China, India, Taiwan, Brazil
• Latin America: Brazil, Mexico, Chile
• Other: South Africa, Saudi Arabia, Indonesia

Emerging markets offer higher potential returns and higher volatility. Political risk, currency swings, and regulatory changes can cause significant short-term drops. India’s stock market, for example, has been one of the world’s best performers over the past decade, while China’s market has disappointed many investors who expected similar results.

Which Should You Own?

Most investors hold both through a single total international fund. If you want to customize, a common approach is to weight more toward developed markets (which are less volatile) and less toward emerging markets. A simple starting point: two-thirds developed, one-third emerging within your international allocation.

The Best International ETFs in 2026

For most investors, a single low-cost international ETF is all you need. Here are the strongest options.

VXUS: Vanguard Total International Stock ETF

VXUS is the single most popular international stock ETF and the one most index fund investors reach for first. It tracks over 8,000 stocks across 47 countries, covering the entire non-US developed and emerging world in one fund. The 0.07% expense ratio means you pay $0.70 per year for every $1,000 invested.

If you want one fund to cover all international exposure without any decisions about country weighting or fund combinations, VXUS is the default choice. It pairs naturally with VTI (Vanguard Total US Stock Market ETF) to create a complete global equity portfolio with just two funds. This is the foundation of the 3-fund portfolio strategy.

VEA: Vanguard FTSE Developed Markets ETF

VEA covers developed markets only, excluding emerging markets entirely. It is slightly cheaper than VXUS at 0.05% and appropriate for investors who want international exposure but prefer to avoid emerging market volatility. Japan, the United Kingdom, Canada, France, and Germany make up the largest country weights.

If you want to customize your emerging market allocation separately (or skip it), pair VEA with VWO in whatever ratio suits your risk tolerance.

VWO: Vanguard FTSE Emerging Markets ETF

VWO gives dedicated emerging market exposure. China, India, Taiwan, and Brazil are typically the largest holdings. This fund is more volatile than VEA or VXUS because emerging markets experience larger swings in both directions. Over long periods, emerging markets have the potential for higher returns, but also for extended disappointing stretches (China is the most prominent recent example).

VWO is best used in combination with VEA rather than as a standalone international holding, unless you have a specific thesis about emerging market outperformance.

IXUS: iShares Core MSCI Total International Stock ETF

IXUS is the iShares equivalent of VXUS. Both cover the total non-US international market at 0.07% expense ratio. The main difference is the underlying index (FTSE for VXUS, MSCI for IXUS) which leads to slightly different country classifications, particularly for South Korea. Both are excellent choices. If you use Fidelity or BlackRock products primarily, IXUS may be more convenient. If you use Vanguard, VXUS is the natural fit.

SWISX: Schwab International Index Fund

SWISX is a mutual fund (not an ETF) that covers developed international markets at 0.06% with no minimum investment. It is ideal for Schwab account holders who prefer mutual funds for automatic monthly investing, since you can invest exact dollar amounts rather than buying whole ETF shares. For Schwab users, it pairs naturally with SCHB (US total market) and SCHF (international developed) for a streamlined portfolio.

ETF Comparison at a Glance

Fund	Type	Expense Ratio	Coverage	Best For
VXUS	ETF	0.07%	All international (dev + EM)	One-fund simplicity, Vanguard users
VEA	ETF	0.05%	Developed only	Lower volatility, pair with VWO
VWO	ETF	0.08%	Emerging only	Higher growth potential, pairs with VEA
IXUS	ETF	0.07%	All international (dev + EM)	Fidelity/BlackRock users, MSCI index
SWISX	Mutual Fund	0.06%	Developed only	Schwab users, automatic investing

How Much of Your Portfolio Should Be International?

There is no single correct answer, but here is a useful framework based on different investor profiles.

Market-Weight Approach: 40%

Global market capitalization is roughly 60% US, 40% international. If you believe markets are efficient and want to own the world in proportion to its market value, holding 40% international makes sense. This is the “pure” passive approach that does not express any view about which region will outperform.

Moderate International Tilt: 20% to 30%

Many US-based investors hold less than market weight international, acknowledging the arguments for US diversification (global companies, currency risk, familiarity) while maintaining some international exposure. 20% to 30% is the most common range among self-directed US investors. This is the approach recommended in most three-fund portfolio implementations.

Minimal International: 10% to 20%

Some investors hold a smaller international allocation, prioritizing simplicity and accepting the concentrated US market bet. This is not unreasonable, but it does mean a prolonged period of US underperformance will hit your portfolio harder than if you were more globally diversified.

What to Avoid

• Zero international: A concentrated bet on one country over many decades is a meaningful risk, even if that country is the US.
• Over 50% international: Unless you have a strong reason to believe international will dramatically outperform, this is also a concentrated bet.
• Chasing recent performance: Do not load up on international because you read that emerging markets are about to surge, or bail out because they have underperformed for a few years. Stick to your target allocation and rebalance mechanically.

Step-by-Step: How to Buy International ETFs

Step 1: Open or Use an Existing Brokerage Account

You can buy international ETFs at any major brokerage. Fidelity, Vanguard, Schwab, and Charles Schwab all offer commission-free ETF trading and carry the funds covered in this guide. If you do not have an account yet, see our reviews of Fidelity, Vanguard, and Schwab to choose the right fit.

Step 2: Choose Your Fund

For most investors, VXUS (Vanguard) or IXUS (iShares/Fidelity) covers everything you need in one fund. If you want to split between developed and emerging, use VEA plus VWO. Use the allocation calculator above to get your specific dollar targets.

Step 3: Place a Buy Order

In your brokerage account, search for the ticker (VXUS, VEA, etc.), enter the number of shares you want to buy, and place a market or limit order. ETFs trade like stocks throughout the day, so the price fluctuates minute to minute. A market order buys immediately at the current price. A limit order only executes if the price falls to your specified level. For long-term investors buying and holding, market orders are fine.

Step 4: Set a Rebalancing Schedule

Once a year, check your actual international allocation against your target. If your international stocks have grown to 35% of your portfolio but your target is 30%, sell a small amount and redirect to US stocks (or simply direct new contributions to US stocks until you return to target). Annual rebalancing maintains your intended risk profile without requiring constant attention.

Key Risks to Understand

Currency Risk

When you own international stocks, the returns you receive in US dollars depend on two things: how the stocks perform in their local currency, and how that currency moves against the dollar. If European stocks rise 8% but the euro falls 5% against the dollar, your return as a US investor is closer to 3%.

Currency risk cuts both ways. A weakening dollar increases your international returns. A strengthening dollar reduces them. Most long-term investors accept this risk rather than hedging it, as currency movements tend to even out over time and currency-hedged funds typically have higher costs.

Political and Regulatory Risk

International markets, especially emerging markets, carry political risk that US investors are not used to. Government seizures of assets, sudden regulatory changes, sanctions, or political instability can cause sharp drops in specific country stocks. Broad international ETFs reduce this risk through diversification across many countries, but it cannot be eliminated entirely.

Liquidity and Trading Hours

International ETFs trade on US exchanges during US market hours, so there is no issue with buying or selling. However, the underlying stocks in the fund trade on their local exchanges in different time zones, which can cause the ETF price to diverge slightly from its net asset value during US trading hours. For long-term buy-and-hold investors, this is not a meaningful concern.

Tax Considerations: The Foreign Tax Credit

When international companies pay dividends, those dividends are often subject to withholding taxes in the home country before they reach you. This sounds like a cost, but the IRS allows you to claim a foreign tax credit for taxes paid to foreign governments, which offsets the tax you would otherwise owe in the US.

In a taxable brokerage account, you can typically claim this credit directly on your tax return. International ETFs held in retirement accounts like IRAs and 401(k)s do not benefit from the foreign tax credit because those accounts do not pay taxes on dividends and capital gains annually. For this reason, some investors prefer to hold international funds in taxable accounts to take full advantage of the foreign tax credit.

This is a nuance that matters more as portfolio values grow. For most beginning investors, the tax impact is small and should not drive your decision about where to hold international funds.

Frequently Asked Questions

Should I invest in international stocks?

Most financial experts recommend holding some international stocks, typically 20% to 40% of your equity portfolio, as a diversification measure. The US represents about 60% of global stock market value, and excluding international stocks is a concentrated bet on one country’s continued outperformance. Over some historical periods international stocks have significantly outperformed US stocks, and over others the reverse has been true. Holding both reduces the risk of being on the wrong side of extended regional underperformance.

What is the best ETF for international stocks?

For most investors, VXUS (Vanguard Total International Stock ETF, 0.07% expense ratio) is the simplest and most cost-effective single-fund option. It covers over 8,000 stocks across 47 countries in one fund. Fidelity users can use IXUS for similar coverage at the same cost. Schwab users can use SWISX (developed markets) or SCHF.

How much of my portfolio should be international?

A common range is 20% to 40% of your equity holdings in international stocks. The precise amount depends on your conviction about global diversification, your time horizon, and your comfort with currency risk. 30% international is a widely used starting point that balances diversification against the argument that large US companies already generate global revenues. Use the calculator above to see what your dollar targets look like at different allocation levels.

What is the difference between developed and emerging market stocks?

Developed markets (Japan, UK, Germany, Canada, Australia, etc.) are economically mature countries with stable institutions and liquid financial markets. They tend to be less volatile but also slower-growing. Emerging markets (China, India, Brazil, Taiwan, etc.) are faster-growing but less stable economies with higher volatility and political risk. Most total international funds like VXUS include both, with roughly 80% developed and 20% emerging by market cap.

Can I buy international stocks directly without an ETF?

Yes, but it is significantly more complicated. Many foreign companies list their shares on US exchanges as American Depositary Receipts (ADRs), which you can buy like regular stocks. Examples include Toyota (TM), Nestle (NSRGY), and ASML (ASML). You can also open accounts with some brokerages that allow direct purchases on foreign exchanges. For most investors, a low-cost international ETF is far simpler, more diversified, and more cost-effective than building a portfolio of individual foreign stocks.

Is now a good time to invest in international stocks?

Timing the market consistently is not achievable, and the same applies to international stocks. Rather than trying to call the right entry point, most long-term investors choose a target international allocation and maintain it through regular contributions and annual rebalancing. International stocks have underperformed US stocks for much of the past decade, which means valuations are relatively lower than they were, but whether that represents opportunity or continued underperformance is not knowable in advance.

The Bottom Line

Investing in international stocks is simpler than it sounds. You do not need to research foreign companies or navigate overseas brokerages. A single low-cost ETF like VXUS or IXUS gives you instant diversification across thousands of companies in dozens of countries at a cost of $0.70 per year per $1,000 invested.

The practical starting point for most investors: decide what percentage of your equity portfolio you want in international stocks (20% to 30% is a reasonable range), buy VXUS or an equivalent fund, and rebalance once per year. That is genuinely all that is required.

For the broader context of how international stocks fit into a complete investment portfolio, see our guide to building a 3-fund portfolio, which is the most popular framework for combining US stocks, international stocks, and bonds in a simple, low-cost structure. And if you are just getting started with investing overall, our guide to investing in your 20s covers the foundational steps before diving into asset allocation decisions.