Finding the Best International ETF: Why Global Diversification Matters in Market Uncertainty

When political gridlock threatens to disrupt market momentum, savvy investors often turn their attention beyond domestic boundaries. The best international ETF choices can provide meaningful portfolio protection and diversification opportunities that go beyond U.S. equity exposure. While the S&P 500 has demonstrated resilience—climbing approximately 14% during 2025 despite government operational challenges—the international investing landscape tells an even more compelling story for those willing to look beyond American shores.

International ETF Performance: Beyond the U.S. Market

The contrasts in 2025 performance paint a revealing picture. While the benchmark index held steady, certain global markets surged ahead. The iShares MSCI Poland ETF (NYSEMKT: EPOL) delivered particularly striking gains, rising 57% throughout the year—more than four times the S&P 500’s advance. This dramatic outperformance naturally captures investor attention, yet it simultaneously illustrates a fundamental investment challenge: chasing recent winners frequently proves costly.

The Poland-specific fund tracks exclusively Polish equities, offering concentrated exposure to a single nation’s economy. For most investors, this level of geographic concentration introduces complexity and knowledge requirements that may exceed practical investment expertise. Few of us possess sufficient familiarity with Polish markets, economic trends, or political factors to justify substantial capital allocation to such a narrowly focused vehicle.

Fortunately, alternatives exist that capture international upside while maintaining broader geographic distribution. The Vanguard Total International Stock ETF (NASDAQ: VXUS) and Vanguard FTSE Europe ETF (NYSEMKT: VGK) have similarly outpaced domestic benchmarks in 2025, offering considerably more balanced exposure across multiple developed and emerging markets.

Vanguard’s Diversified Approach: Lower Costs, Global Reach

The best international ETF solution depends partly on your desired level of specialization. The Vanguard Total International Stock ETF represents perhaps the ultimate in foreign diversification, providing exposure to virtually every non-U.S. stock market worldwide. This comprehensive approach eliminates the need for deep knowledge about specific countries or regions. At a mere 0.05% expense ratio, this fund delivers broad-based international participation at minimal cost.

For investors preferring more targeted geographic exposure, the Vanguard FTSE Europe ETF offers a compelling middle ground. It concentrates holdings across European equities while maintaining meaningful diversification across multiple nations and sectors. The fund’s 0.06% expense ratio remains favorably competitive. Notably, Poland represents approximately 0.9% of this portfolio’s composition—sufficient for meaningful European exposure without overconcentration in any single market.

These structural characteristics illustrate why expense ratios matter significantly. Fractions of a percentage point compound meaningfully over decades of investing. Lower costs directly translate to superior long-term returns, a mathematical certainty that shouldn’t be overlooked when selecting funds.

The Diversification Trade-off: Choosing Your Strategy

Hindsight naturally suggests that buying the Poland ETF at 2025’s outset would have generated exceptional returns. However, this perspective ignores a crucial reality: if you had made the identical allocation decision at the start of 2021, dramatically different outcomes would have emerged. Performance leadership rotates across markets and years; attempting to predict these rotations consistently proves futile.

This historical reality supports two key insights. First, concentrating your entire portfolio in any single country—including the United States—introduces unnecessary risk. American markets, despite their scale and liquidity, represent just one portion of global economic growth. Second, constructing a deliberately diversified global portfolio hedges against concentrated bets on any nation’s economic trajectory.

The mathematics of diversification speak clearly: spreading capital across multiple markets reduces volatility and smooths returns over time. Some years favor U.S. equities; others favor European or Asian markets. Rather than gambling on which region will lead, diversification provides steady exposure to global economic expansion across shifting economic cycles.

Making Your Choice: Building an Effective Global Portfolio

The evidence increasingly suggests that most investors benefit from intentional international ETF positioning. The best international ETF strategy balances these considerations: maintain meaningful U.S. equity exposure—this country remains economically enormous and fundamentally important—while allocating a meaningful portion to global markets through vehicles offering broad diversification and minimal costs.

Avoid the trap of using recent performance as an investment signal. That 57% Poland gain should inspire caution rather than enthusiasm. Buying surging markets at peak valuations frequently marks the beginning of underperformance, not continued outperformance. Instead, focus on your overall portfolio composition and whether adding these diversified vehicles strengthens your long-term wealth-building framework.

Consider your time horizon, risk tolerance, and existing holdings. If your portfolio consists entirely of U.S.-based stocks or funds, adding international exposure likely makes strategic sense. The Vanguard options provide efficient, low-cost mechanisms for achieving genuine global diversification without requiring specialized market knowledge. Their reasonable expense ratios ensure that you retain maximum investment returns rather than surrendering wealth to fees.

The political dysfunction occasionally visible in Washington remains temporary and manageable. Economic growth persists globally despite periodic governmental challenges. By positioning your portfolio to capture that worldwide expansion—not through emotional reactions to short-term market movements, but through deliberate long-term strategy—you construct a framework for sustainable wealth accumulation across market cycles and decades.