Exploring the Best International ETF Options for Building a Diversified Investment Portfolio

Conventional wisdom suggests that American investors should remain focused on domestic markets for stability and performance. However, the landscape of modern portfolio management reveals compelling reasons to explore beyond U.S. borders. The best international ETF selections can unlock new opportunities and strengthen overall investment resilience.

Why International Diversification Matters Now

Diversification stands as a foundational principle when navigating uncertain market terrain. Concentrating capital exclusively in one geographic region or sector exposes investors to concentrated risk. A more balanced approach—one that spans multiple geographies and asset classes—can help weather market volatility with greater confidence.

Additionally, while U.S. markets have delivered strong performance recently, valuations in certain international markets remain attractive. Some of the most compelling opportunities may exist where investor attention has yet to focus. This creates a window for those willing to explore developed and emerging markets outside America.

BNY Mellon International Equity ETF: A Comprehensive Core Holding

For investors seeking a solid foundation in the best international ETF space, the BNY Mellon International Equity ETF (NYSEARCA: BKIE) deserves examination. This fund tracks the Morningstar Developed Markets ex-US Large Cap Index, providing exposure to established international blue-chip companies.

The fund’s sector composition reveals a financial services-heavy portfolio at 21.29%, with industrials representing 15.62% and healthcare contributing 12.92%. Geographically, BKIE skews toward the Eurozone at 28% of assets, while Japan comprises 22.7%, with additional European exposure rounding out the allocation.

Performance has been modest year-to-date, returning under 4% compared to the broader U.S. market’s stronger gains. However, the true appeal lies in the fund’s cost structure—an expense ratio of just 0.04% stands well below the 0.38% category average. For long-term investors prioritizing low-cost exposure to developed markets, BKIE offers compelling value.

Schwab International Small-Cap Equity ETF: Adding Growth Potential

To introduce higher growth prospects into your best international ETF allocation, the Schwab International Small-Cap Equity ETF (NYSEARCA: SCHC) merits serious consideration. This fund targets the FTSE Developed Small Cap ex US Liquid Index, providing access to smaller companies operating outside the United States.

Small-cap investing naturally carries elevated risk but also offers enhanced growth potential. Within SCHC’s holdings, industrials lead at 21.74%, followed by consumer cyclical stocks at 11.97% and financial services at 11.42%. The geographic mix emphasizes Canada (20.7%), Japan (19%), and the Eurozone (18.1%).

Recent returns have lagged, with the fund posting gains below 1% since year-start. Yet like its larger-cap counterpart, SCHC impresses with its fee structure—a 0.11% expense ratio sits comfortably beneath the 0.29% category benchmark. Conservative investors might view current weakness as a potential entry point for a patient, long-term approach.

iShares Asia 50 ETF: A Contrarian Play on Regional Growth

For those with higher risk tolerance and conviction in Asian markets, the iShares Asia 50 ETF (NASDAQ: AIA) represents an intriguing choice among best international ETF options. Tracking the S&P Asia 50 Index, this fund provides concentrated exposure to the 50 largest Asian equities.

The fund maintains a heavy technology weighting at 40.25% of assets, reflecting the region’s innovation-driven economy. Financial services contribute 21.03%, while communication services round out the top holdings at 15.78%. The portfolio balances developed Asian markets (62.4%) against emerging markets exposure (37.6%).

While Asia faces near-term headwinds including China’s economic challenges and geopolitical tensions, contrarian investors may view this weakness as temporary. The fund’s 0.5% expense ratio sits nearly at parity with the category average of 0.54%, making it reasonably priced for the regional focus it provides.

Building Your Diversification Strategy

The best international ETF selection depends on your risk tolerance, time horizon, and market outlook. BKIE serves as a stable, low-cost foundation for developed market exposure. SCHC adds smaller-cap growth potential with minimal fees. AIA offers concentrated Asia exposure for those seeking higher-risk, higher-reward positioning.

Rather than viewing these options as competing choices, consider how they work together to reduce geographic concentration risk. A diversified international allocation—thoughtfully constructed across these vehicle options—can help position your portfolio to benefit from opportunities wherever they emerge globally.