These ETFs concentrate very heavily into nations with the largest current market capitalization, such as Japan and the UK, which means they emphasize countries with past growth rather than emphasizing countries with the greatest forward return potential.Īdditionally, fund inflows into multi-country cap-weighted indices constantly flow away from troubled areas and into places where everything is great, because they buy more heavily into higher market cap countries. I am not a big fan of pure market cap weighted international ETFs such as the Vanguard Total International or All-World ETFs (VXUS and VEU), or anything that follows the MSCI EAFE index (like iShares EFA).

Investors, however, should pay attention to the geographies and sectors involved in any multi-country ETF to ensure that the filtering method that the ETF uses makes sense for long-term total return potential. Most investors prefer simpler international holdings than that, and there are broader ETFs that can answer the call. Due to my inclusion of single country ETFs in various portfolios, I typically hold over a dozen international equity ETFs at any given time.

Lyn alden schwartzer