Canada makes up just 3% of global stock markets, yet many Canadian investors have 50%+ of their equity in Canadian stocks. International ETFs fix that home bias. XEF and VIU give you diversified exposure to Japan, the UK, Germany, Australia, and dozens of other developed markets at MERs of just 0.22–0.23%. For emerging markets (China, India, Taiwan, Brazil), XEC and VEE add high-growth economies at 0.24–0.28%. If you already hold XEQT or VEQT, international stocks are built in — you don’t need separate funds. For the broader structure of those products, start with our ETFs and index funds hub.
Best International ETFs Canada 2026
| ETF | Ticker | MER | Focus | Holdings |
|---|---|---|---|---|
| iShares Core MSCI EAFE | XEF | 0.22% | Developed ex-NA | 2,800+ |
| Vanguard FTSE Developed All Cap ex NA | VIU | 0.23% | Developed ex-NA | 3,800+ |
| BMO MSCI EAFE | ZEA | 0.22% | Developed ex-NA | 800+ |
| iShares Core MSCI Emerging Markets | XEC | 0.28% | Emerging markets | 3,400+ |
| Vanguard FTSE Emerging Markets | VEE | 0.24% | Emerging markets | 5,600+ |
| iShares International Fundamental | CIE | 0.72% | Fundamental weighted | 900+ |
| BMO MSCI All Country World High Quality | ZGQ | 0.45% | Global quality | 300+ |
Regional Breakdown
| Region | Best ETF | Largest Countries |
|---|---|---|
| Developed ex-NA | XEF or VIU | Japan, UK, France, Germany, Australia |
| Emerging markets | XEC or VEE | China, India, Taiwan, Brazil, South Korea |
| Europe only | — | Use XEF (heavy Europe weight) |
| Asia-Pacific | — | Use XEF or VIU |
International vs North America
| Feature | International (XEF) | US (VFV) | Canada (XIU) |
|---|---|---|---|
| MER | 0.22% | 0.09% | 0.18% |
| 10Y return | ~5-7% | ~12-14% | ~8-10% |
| Diversification | ✅ Best | US-only | Canada-only |
| Currency risk | ✅ Multi-currency | USD | CAD |
| Valuation | Often cheaper | Often expensive | Moderate |
Portfolio Allocation Guide
If you are not building a custom sleeve and just want a one-ticket solution, compare best all-in-one ETFs in Canada.
| Strategy | Canada | US | International | Emerging |
|---|---|---|---|---|
| Market weight (global) | 3% | 60% | 27% | 10% |
| Canadian-tilted | 25% | 40% | 25% | 10% |
| Simple 3-fund | 33% | 33% | 33% | — |
Who Should Buy International ETFs
| Profile | Recommendation |
|---|---|
| Already hold XEQT/VEQT | ⚠️ International already included (~35%) |
| Building custom portfolio | ✅ XEF + XEC for international sleeve |
| Want cheaper valuations | ✅ International often trades at lower P/E |
| Simplicity preferred | ⚠️ Use all-in-one ETF instead |
If you want to break out the higher-volatility part of that sleeve separately, see best emerging market ETFs in Canada.
Currency exposure matters here too, especially outside North America, so this page pairs with hedged vs unhedged ETFs in Canada.
The Bottom Line
XEF (developed) and XEC (emerging) are the cheapest way to add international diversification to a custom portfolio. If you want simplicity, an all-in-one fund like XEQT already includes roughly 35% international exposure. International stocks often trade at lower valuations than US stocks, which may mean better long-term returns for patient investors.
Holding international ETFs: which account?
Account placement matters for international ETFs, though not as much as for US equity:
| ETF | TFSA | RRSP | Non-registered |
|---|---|---|---|
| XEF / VIU (developed ex-NA) | ~0.30–0.50% drag | ~0.15–0.30% drag | ~0.30–0.50% drag, T2209 partial recovery |
| XEC / VEE (emerging markets) | ~0.30–0.60% drag | ~0.20–0.40% drag | ~0.30–0.60% drag, partial T2209 |
Unlike US equities (where RRSP is clearly superior due to the treaty), the benefit of holding international in RRSP over TFSA is modest (~0.10–0.20% per year). For simplicity, holding XEQT or VEQT (which include international) in whichever account you are filling is perfectly reasonable.
International ETFs vs all-in-one ETFs
If you already hold XEQT or VEQT, you do not need separate international ETFs — they are already included:
| All-in-one ETF | International allocation |
|---|---|
| XEQT (iShares all-equity) | ~25% MSCI EAFE + ~10% emerging markets |
| VEQT (Vanguard all-equity) | ~30% international developed + ~10% emerging |
| XBAL (iShares 60/40) | ~15% international equity + ~6% EM (within equity sleeve) |
Adding XEF or VIU on top of XEQT increases your international tilt beyond the default weighting — reasonable if you believe international stocks are undervalued relative to US stocks, but not necessary for a simple passive strategy.
Frequently asked questions
Should I add international ETFs if I already hold XEQT? No — XEQT already includes ~35% international equity. Adding XEF or XEC creates an international overweight. Only do this intentionally if you believe international markets are undervalued relative to the US.
Why have international ETFs underperformed the S&P 500? From 2010–2024, US stocks vastly outperformed international markets due to the dominance of US technology companies. International valuations are now considerably cheaper on a price-to-earnings basis, which some analysts interpret as a higher expected future return — though timing market cycles is unreliable.
Do I need to worry about currency risk? Yes, but it cuts both ways. A weak Canadian dollar increases your international ETF returns when holdings appreciate in their local currencies. Most Canadian investors hold unhedged international ETFs (XEF, VIU) and accept the currency exposure as part of a diversified global portfolio.
What is the difference between XEF and VIU? Both track developed-market international stocks excluding North America. XEF (iShares) tracks the MSCI EAFE Index with ~2,800 holdings. VIU (Vanguard) tracks the FTSE Developed All Cap ex North America with ~3,800 holdings, including small-cap stocks. VIU is marginally more diversified; both are excellent choices at similar MERs.