International ETF

AAA

DEFINITION of 'International ETF'

Any exchange-traded fund that invests in foreign-based securities. The focus may be global, regional (such as Latin America, Asia-Pacific, etc.) or on a specific country.

International ETFs are invested passively around an underlying index, but the index may vary substantially from one fund manager to the next. Some funds, especially those with a wide global footprint or those that invest in countries with advanced economies, can provide strong diversification by investing in hundreds of companies.

INVESTOPEDIA EXPLAINS 'International ETF'

ETFs that invest in a single foreign country may carry higher risks than international ETFs that spread their investments among many countries. If a single country undergoes a major recession or other financial hardship, an ETF that only invests in securities based there could have a major performance shortfall.

International ETFs are becoming a widespread investment vehicle for U.S. investors, as many global economies are growing at a faster rate and, thanks to rapid advances in globalization and financial regulation, their financial markets are opening to outside investment.

In general, expense ratios for international ETFs tend to be higher than the averages because of the higher costs to invest abroad.

VIDEO

Loading the player...
RELATED TERMS
  1. Chemicals Industry ETF

    An exchange-traded fund that invests in manufacturers of chemicals. ...
  2. International Investing

    The strategy of selecting globally-based investment instruments ...
  3. International Portfolio

    A grouping of investment assets that focuses on securities from ...
  4. Emerging Market ETF

    An exchange-traded fund that focuses on the stocks of emerging ...
  5. American Depositary Receipt - ADR

    A negotiable certificate issued by a U.S. bank representing a ...
  6. Global Depositary Receipt - GDR

    1. A bank certificate issued in more than one country for shares ...
RELATED FAQS
  1. How does an economic downturn affect a cyclical stock?

    An economic downturn negatively affects a cyclical stock. Its stock price declines as earnings and revenues tumble. Cyclical ... Read Full Answer >>
  2. What is the difference between a green field and a brown field investment?

    Green-field and brown-field investments are two different types of foreign direct investment, or FDI. Green-field investments ... Read Full Answer >>
  3. What are the most common ETFs that track the chemicals sector?

    As of 2015, no exchange-traded funds (ETFs) exclusively track the chemical sector, but ETFs are available that track chemical ... Read Full Answer >>
  4. What are the best mutual funds for investing in the electronics sector?

    Within the technology sector, the electronics industry continues to experience growth as the technology that supports producing ... Read Full Answer >>
  5. How do government bailouts increase moral hazard?

    Government bailouts increase moral hazard by engendering a business climate in which companies feel they will be protected ... Read Full Answer >>
  6. What does it mean when a country has little activity in its capital account?

    Since a country's capital account represents money flow into the country through foreign investment, having only a small ... Read Full Answer >>
Related Articles
  1. Mutual Funds & ETFs

    Building An All-ETF Portfolio

    Balance is the key when selecting an all-ETF portfolio that will hedge against market volatility.
  2. Economics

    Globalization: Progress Or Profiteering?

    Proponents of globalization argue that it helps the economies of developing nations and makes goods cheaper, while critics say that globalization reduces domestic jobs and exploits foreign workers. ...
  3. Mutual Funds & ETFs

    Getting Into International Investing

    Diversifying can mean not only investing in various asset classes but also venturing beyond domestic exchanges.
  4. Mutual Funds & ETFs

    4 ETF Strategies For A Down Market

    If the market's got you feeling low, these investments could pick you up.
  5. Home & Auto

    Introduction To International REITs

    Avoid being left behind as REITs expand beyond U.S. borders.
  6. Mutual Funds & ETFs

    ETF Liquidity: Why It Matters

    Lower levels of liquidity in exchange-traded funds make it harder to trade them profitably.
  7. Mutual Funds & ETFs

    Mutual Fund Or ETF: Which Is Right For You?

    Learn the differences between these investment products and how to take full advantage.
  8. Economics

    What Is An Emerging Market Economy?

    Emerging markets provide new investment opportunities, but there are risks - both to residents and foreign investors.
  9. Bonds & Fixed Income

    Does International Investing Really Offer Diversification?

    Historically, international investing has worked out well for investors, but this may no longer be the case.
  10. Mutual Funds & ETFs

    Exchange-Traded Funds (ETFs)

    This vehicle combines the diversification of a mutual fund with the flexibility of a stock. Learn more about them here.

You May Also Like

Hot Definitions
  1. Standard Error

    The standard deviation of the sampling distribution of a statistic. Standard error is a statistical term that measures the ...
  2. Capital Stock

    The common and preferred stock a company is authorized to issue, according to their corporate charter. Capital stock represents ...
  3. Unearned Revenue

    When an individual or company receives money for a service or product that has yet to be fulfilled. Unearned revenue can ...
  4. Trailing Twelve Months - TTM

    The timeframe of the past 12 months used for reporting financial figures. A company's trailing 12 months is a representation ...
  5. Subordinated Debt

    A loan (or security) that ranks below other loans (or securities) with regard to claims on assets or earnings. Also known ...
  6. International Financial Reporting Standards - IFRS

    A set of international accounting standards stating how particular types of transactions and other events should be reported ...
Trading Center