Canada was about 3% of the MSCI ACWI global stock index on August 31, 2026, yet Canadian investors often hold far more Canadian stocks than that. International ETFs offset that home bias. XEF and VIU give you diversified exposure to Japan, the UK, France, Switzerland, Germany and dozens of other developed markets at MERs of 0.22% and 0.21%. For emerging markets (Taiwan, South Korea, China, India, Brazil), XEC and VEE charge 0.28% and 0.24%. 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
| ETF | Ticker | MER | Focus | Holdings |
|---|---|---|---|---|
| iShares Core MSCI EAFE IMI | XEF | 0.22% | Developed ex-NA | 2,466 |
| Vanguard FTSE Developed All Cap ex NA | VIU | 0.21% | Developed ex-NA | 3,654 |
| BMO MSCI EAFE | ZEA | 0.22% | Developed ex-NA | 676 |
| iShares Core MSCI Emerging Markets IMI | XEC | 0.28% | Emerging markets | 2,919 |
| Vanguard FTSE Emerging Markets All Cap | VEE | 0.24% | Emerging markets | 6,348 |
| iShares International Fundamental | CIE | 0.72% | Fundamental weighted | 1,014 |
| BMO MSCI All Country World High Quality | ZGQ | 0.50% | Global quality | 510 |
MERs are each provider’s published figure; holdings counts are from the provider pages in September 2026 (ZEA and ZGQ from BMO’s August 31, 2026 fact sheets).
Regional Breakdown
| Region | Best ETF | Largest Countries |
|---|---|---|
| Developed ex-NA | XEF or VIU | Japan, UK, France, Switzerland, Germany |
| Emerging markets | XEC or VEE | Taiwan, South Korea, China, India, Brazil |
| Europe only | n/a | Use XEF (heavy Europe weight) |
| Asia-Pacific | n/a | Use XEF or VIU |
International vs North America
| Feature | International (XEF) | US (VFV) | Canada (XIU) |
|---|---|---|---|
| MER | 0.22% | 0.08% | 0.17% |
| 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 (MSCI ACWI, August 31, 2026) | 3% | 64% | 33% (international and emerging combined) | Included in international |
| Canadian-tilted (example) | 25% | 40% | 25% | 10% |
| Simple 3-fund (example) | 33% | 33% | 33% | n/a |
Who Should Buy International ETFs
| Profile | Recommendation |
|---|---|
| Already hold XEQT/VEQT | ⚠️ International already included (XEQT 29%, VEQT 25% including emerging markets) |
| 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 or VIU (developed) and XEC or VEE (emerging) are low-cost ways to add international diversification to a custom portfolio. If you want simplicity, an all-in-one fund like XEQT already includes about 29% international and emerging-market stocks. International stocks have often traded at lower valuations than US stocks; some investors read that as a higher expected return, though valuations are a poor timing tool.
Holding international ETFs: which account?
Account placement matters less for international ETFs than for US equity. Dividends from each country lose tax at that country’s own rate, which the country-by-country withholding tax guide sets out:
| ETF | TFSA | RRSP | Non-registered |
|---|---|---|---|
| XEF / VIU (developed ex-NA) | Foreign withholding lost | Foreign withholding lost | Foreign tax credit (T2209) can recover some of it |
| XEC / VEE (emerging markets) | Foreign withholding lost | Foreign withholding lost | Foreign tax credit (T2209) can recover some of it |
Unlike US-listed ETFs, where the Canada-US treaty exempts US dividends paid to an RRSP, Canadian-listed international ETFs get no withholding-tax advantage in an RRSP over a TFSA. For simplicity, holding XEQT or VEQT (which include international) in whichever account you are filling is a common approach.
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) | 24.41% developed international + 4.78% emerging markets |
| VEQT (Vanguard all-equity) | 17.63% developed international + 7.00% emerging markets |
| XBAL (iShares 60/40) | 15.04% developed international + 2.97% emerging markets |
Weights are the providers’ figures for August 31, 2026.
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? Usually not: XEQT already held about 29% international and emerging-market stocks on August 31, 2026. Adding XEF or XEC raises that share beyond XEQT’s design, which only makes sense as a deliberate tilt.
Why have international ETFs underperformed the S&P 500? For much of the 2010s and early 2020s, US stocks, led by large technology companies, outperformed most international markets. International stocks have tended to trade at lower price-to-earnings ratios as a result, 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. XEF and VIU are not currency-hedged, so their holders 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, including small caps. XEF (iShares) tracks the MSCI EAFE IMI Index and held 2,466 stocks; VIU (Vanguard) tracks the FTSE Developed All Cap ex North America Index and held 3,654. Their MERs are 0.22% and 0.21%, so the difference between them is small.
Related Resources
Sources
The figures and rules on this page come from these sources, last checked against them on September 25, 2026. How we check facts.
- BlackRock iShares: iShares Core MSCI EAFE IMI Index ETF | XEF | CAD
- BlackRock iShares: iShares Core MSCI Emerging Markets IMI Index ETF | XEC | CAD
- BlackRock iShares: iShares International Fundamental Index ETF | CIE | COMMON
- BlackRock iShares: iShares S&P/TSX 60 Index ETF | XIU
- BlackRock iShares: iShares Core Equity ETF Portfolio | XEQT
- BlackRock iShares: iShares Core Balanced ETF Portfolio
- BMO Global Asset Management: ZEA - Factsheet
- BMO Global Asset Management: ZGQ - Factsheet
- MSCI: MSCI ACWI Index
- Vanguard: FTSE Developed All Cap ex North America Index ETF | Vanguard Canada
- Vanguard: FTSE Emerging Markets All Cap Index ETF | Vanguard Canada
- Vanguard: Factsheet | August 31, 2026
- Vanguard: S&P 500 Index ETF | Vanguard Canada
- Vanguard: Factsheet | August 31, 2026
- Vanguard: All-Equity ETF Portfolio | Vanguard Canada