A prominent theme in the world of exchange-traded funds (ETFs) this year is investors' affinity for ex-U.S. developed markets ETFs, particularly those with low fees. Data suggest that investors are running to low-cost international ETFs, and many of this year's top asset gatherers in that group have annual expense ratios of less than 0.1%. So it can be said that the iShares Core MSCI International Developed Markets ETF (IDEV) is an example of a well-timed new ETF. The fund launched in March with an annual fee of 0.07%, or $7 on a $10,000 investment. That immediately made IDEV one of the least expensive developed market ETFs trading in the U.S.

Investors are responding to IDEV's bargain proposition. Still a few days shy of its six-month anniversary, IDEV is now a $92.2 million ETF. That also makes it one of the most successful new ETFs to debut in 2017. IDEV does not track the popular MSCI EAFE Index or a related benchmark. Rather, this ETF follows the MSCI WORLD ex USA IMI Index. One of the marquee differences between IDEV and MSCI EAFE strategies is that IDEV features exposure to Canadian stocks whereas the MSCI EAFE Index does not. (See also: A Cheap Way to Developed Markets Exposure.)

Canadian stocks account for almost 9% of IDEV's weight, making that the ETF's fourth largest geographic exposure. As is the case with MSCI EAFE strategies, IDEV is heavily allocated to Japan, the U.K. and France. Those developed markets combine for 47% of the fund's geographic exposure. Overall, IDEV features exposure to more than 15 countries, including 10 European nations.

In the second quarter, the MSCI Europe Index posted earnings growth of over 20%, topping the S&P 500, the MSCI Japan Index and the MSCI Emerging Markets Index. Both the MSCI Europe Index and the MSCI Japan Index posted larger percentages of earnings surprises than did the S&P 500, boding well for IDEV over U.S. stocks going forward. (See also: Different Ways to Think About the MSCI EAFE Index.)

"More conventional valuation metrics also appear attractive on a relative basis, in our view; looking at 12-month forward P/E ratio for the MSCI All-Country World Ex-U.S. index, we are currently at the largest valuation gap between U.S. and non-U.S. markets in the 15+ years of data to which we have access," according to RiverFront Investment Group. In other words, with ex-U.S. equity markets looking cheap relative to the S&P 500, an ETF like IDEV has the potential to deliver for long-term investors in the years ahead. (See also: International Diversity for a Modest Fee.)

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