Beyond the U.S.: Top Strategies Using International ETFs
International equity ETFs shine in 2025, offering diverse strategies from value to dividends and low volatility.
International equities have undoubtedly been a top-performing asset class so far in 2025. Analyzing the performance of the MSCI ACWI Total Return Index compared to the MSCI ACWI ex USA Total Return Index reveals clear outperformance, with a year-to-date return of 15.99% versus 6.85%. Looking below the surface, particularly at the equity market returns of seminal countries within the MSCI ACWI ex USA Total Return Index, the relative underperformance of the US equity market is evident.
Differing Ways to Invest Internationally
For investors seeking exposure to international equities, several strategies are available to access this asset class in unique and distinct ways.
Value-Oriented Approach:
For value-oriented investors, both the CI First Asset Morningstar International Value Index ETF (Tickers: VMX/VXM.B) and Fidelity International Value Index ETF (Ticker: FCIV) focus on identifying and investing in equities that appear undervalued by the market, typically trading for less than their intrinsic worth, which is determined through fundamental analysis, such as evaluating earnings, assets, and cash flow.
Low Volatility Approach:
Against the backdrop of an uncertain macroeconomic environment, the effectiveness of the low-volatility investment factor has been evident to investors. For those seeking to invest in international equities with a defensive approach, the BMO Low Volatility International Equity (Tickers: ZLI/ZLD) and TD Q International Low Volatility ETF (Ticker: TILV) provide exposure to equities that experience less fluctuation than their counterparts, resulting in improved risk-adjusted performance and delivering compelling returns.
Dividend-Oriented Approach:
The importance and impact of dividends when investing over a long time horizon have been well established. So much so that some investors take a ‘dividend-focused’ approach to their equity investing, companies that have issued and raised their dividend payouts have historically provided greater total returns with less volatility, making this approach to dividend investing the most common. For investors seeking an international equity solution with a dividend focus, the Purpose International Dividend Fund ETF (Ticker: PID) and Manulife Smart International Dividend ETF (Ticker: IDIV.B) are noteworthy options.
The Combination Approach:
For investors interested in a solution that combines low volatility and dividend investing, the Franklin International Low Volatility High Dividend Index ETF (Ticker: FLVI) provides that combination. Its low volatility focus ensures that the portfolio consists of less volatile stocks than their peers, while the high-dividend focus favors stocks with yields supported by earnings and relatively low price and earnings volatility. This combination results in a portfolio that offers both income generation and stability.
FLVI allows investors to pursue a proven investment strategy that offers inherent risk mitigation and a selection of equities best suited to thrive during the fluctuations of an economic cycle. Furthermore, the solution's dividend focus adds an additional layer of investment security, as the fund will prioritize companies capable of sustainably paying dividends over time.
Please note this article is for information purposes only and does not in any way constitute investment advice. It is essential that you seek advice from a registered financial professional prior to making any investment decision.
