Skip to main content

Finally, a reward for adding stocks from outside North America to your portfolio.

As you’ll see in this latest installment of the 2021 Globe and Mail ETF Buyer’s Guide, returns in the past year for international and global equity funds were uncharacteristically excellent. The average 12-month return clocked in at just over 18 per cent.

Diversification 101 says the segment of your portfolio devoted to stocks should include Canada, the United States and beyond. The problem was the beyond – returns from international markets have generally been lukewarm.

Not all funds holding international stocks have done well lately – international low-volatility ETFs stand out as an exception. But at least there’s now some proof that branching out of North American can pay off through exposure to companies in sectors where Canada is weak, such as health care and technology.

A quick word about terminology: International is a term that refers to markets outside North America, while global funds hold stocks from the United States and elsewhere (including Canada, in some cases). Global funds come off best in this list because of their exposure to the hard-charging U.S. market.

Another key differentiator between funds is whether they include emerging markets as well as developed markets, and whether they hold the shares of small- and medium-size companies as well as large ones. Broader exposure in theory adds the potential for a bit more risk and slightly better returns.

All funds presented here are core funds, which means they’re suitable as your one and only international or global fund. Many of these funds come in versions with and without currency hedging, which mutes the effect of fluctuations in the value of our dollar on returns.

Click here to download an Excel version of the guide.

Click here to download a PDF version of the guide.

Notes: Market data as of March 22, 2021. Returns to Feb. 28, 2021. Sources: Rob Carrick;, TMX Money, ETF company websites

Here’s a look at other terms used in the ETF Buyer’s Guide:

Assets: Shown to give you a sense of how interested other investors are in a fund.

Management expense ratio (MER): The main cost of owning an ETF on a continuing basis; published returns are shown on an after-fee basis.

Trading expense ratio (TER): The cost of trading commissions racked up by the managers of an ETF; add the TER to the MER for a full picture of a fund’s cost. Note that international ETFs tend to have higher TERs than other categories.

Yield: An annualized number based on the latest dividend payout.

Distribution frequency: Some international funds pay dividends on a semi-annual basis, which means they’re not ideal for income-seeking investors who want more regular income payments.

Number of holdings: Gives you an indication of whether a fund offers broad stock market coverage, or holds a more concentrated portfolio that may behave differently than benchmark indexes.

Sector weightings: Included to help you verify how well a global or international equity ETF will diversify your Canadian holdings with exposure to sectors such as tech and health care.

Three-year beta: Beta is a measure of volatility that compares funds to a benchmark stock index, which always has a beta of one. A lower beta means less volatility on both the up and down side. Beta offers a chance to see how well low-volatility ETFs deliver.

Launch date: The older an ETF is, the more likely it is that you can look back at a history of returns through good markets and bad.

Stay informed about your money. We have a newsletter from personal finance columnist Rob Carrick. Sign up today.