International Index Funds — Global Diversification
Overview
International index funds provide exposure to developed and emerging markets outside the US. Global diversification reduces single-country risk and captures growth worldwide. Pair international holdings with domestic equity to build a balanced allocation — our portfolio trackers make monitoring easy. Learn how global diversification fits into broader investment strategies and review key terms in the glossary.
Key Takeaways
- International developed markets (VXUS, IXUS): Europe, Japan, UK, Australia, Canada.
- Emerging markets (VWO, IEMG): China, India, Brazil, Taiwan, South Korea.
- Foreign stocks have outperformed US stocks in some decades — diversification prevents missing that.
- Currency risk adds volatility — a strong US dollar drags on unhedged international returns.
Practical Tips
- A common allocation is 60-80% US / 20-40% international equity.
- VXUS (ex-US developed + emerging) is the simplest one-fund international solution.
- In taxable accounts, foreign tax credits from international funds can offset US tax liability.
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