International stocks represent an attractive option for investors who wish to diversify their domestic holdings. However, holding foreign equities can subject investors to risks, such as currency risks and political risks. Major foreign currencies showed significant signs of weakness and depreciated against the U.S. dollar, reducing substantially positive returns. Investing in overseas markets can also expose investors to adverse changes in economic policies that can result in losses. Despite a slowdown in global growth, investors can still find mispriced investment opportunities abroad. Index mutual funds that invest in international equities and follow a passive investment approach provide cost-effective means of investing overseas.

Fidelity Spartan International Index Fund Investor Class

Assets under management (AUM): $15.3 billion

2010-2015 average annual net asset value (NAV) return: 5.56%

Net expense ratio: 0.2%

The Fidelity Spartan International Index Fund Investor Class tracks the performance of the MSCI EAFE Index, which is a broad index that represents the performance of foreign stock markets. The fund uses sampling techniques to attain investment results similar to those of the underlying index. European stocks have the largest allocation at 66%, while Japanese equities account for about 23% of the fund's assets. The fund provides large exposure to financial and consumer discretionary stocks, which have 25 and 13% allocations respectively. The fund's portfolio is widely diversified; its top 10 holdings account for only about 12% of its assets.

The Fidelity Spartan International Index Fund offers a diversified international portfolio at a very low cost. Because the fund avoids emerging market equities, its returns are subject to lower volatility. Morningstar has awarded the fund a silver analyst rating and a four-star overall rating. The fund is free of load fees and has a minimum investment threshold of $2,500.

Schwab International Index Fund

AUM: $2.9 billion

2010-2015 average annual NAV return: 5.58%

Net expense ratio: 0.19%

The Schwab International Index Fund seeks to track the performance of the MSCI EAFE Index. This fund has a very similar asset allocation to its Fidelity Spartan rival. However, the fund weights its assets slightly more in favor of consumer defensive stocks. Like other international equity stocks, the fund exposes investors to foreign currency fluctuations.

The fund has one of the lowest net expense ratios among its peers and an exceptionally low turnover ratio of just 2%, making it highly tax efficient. Morningstar has awarded the fund a bronze analyst rating and a four-star overall rating. The fund has no load fees and comes with a minimum investment requirement of just $100.

Pax MSCI International ESG Index Fund Individual Investor Class

AUM: $400.1 million

2012-2015 average annual NAV return: 7.48%

Net expense ratio: 0.8%

The Pax MSCI International ESG Index Fund Individual Investor Class tracks the performance of the MSCI EAFE ESG Index, which is a member of the MSCI Global Sustainability Indexes. The index provides exposure to companies with high environmental, social and governance performances relative to their sector peers. The fund's portfolio consists of a mixture of large- and mid-cap foreign stocks with high geographical concentration in the United Kingdom and Japan. About 23% of the fund's assets are allocated to financial stocks, while health care equities have 13% allocation.

Morningstar has given the fund a four-star overall rating. The fund does not charge load fees and comes with a minimum investment requirement of $2,500.

Vanguard Developed Markets Index Fund Investor Shares

AUM: $53.9 billion

2014-2015 NAV return: -2.23%

Net expense ratio: 0.2%

The Vanguard Developed Markets Index Fund Investor Shares tracks the performance of the FTSE Developed All Cap ex U.S. Transition Index, which is an interim index that gradually increases exposure to small-cap equities and Canadian equities. In 2014, Vanguard merged two of its foreign equity funds to form the Vanguard Developed Markets Index Fund. The fund has an exceptionally low turnover ratio of 4%, making this fund very tax efficient for its investors. The fund invests in large- and mid-cap stocks of developed markets in Europe, Asia and Australia. Financial stocks have the highest allocation of 21%, while consumer cyclical equities account for 13% of the fund's portfolio.

For its very low expense ratio, consistent management and return, the fund has earned a gold analyst rating and a four-star overall rating from Morningstar. The fund charges no load fees and requires its investors to contribute at least $3,000.

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