Short answer: An international index fund holds stocks of companies outside the U.S., often thousands of them in a single fund. In the SEC’s fund data (2025 Q3 to 2026 Q2), we counted 412 of them holding about $2.2 trillion; the median charges 0.45% a year in its cheapest share class, but the broad funds from the largest fund companies cost as little as 0.05%.
The U.S. stock market is the largest in the world, but it isn’t the whole world. Thousands of companies in Japan, Europe, Canada, Taiwan and elsewhere are listed on other stock exchanges, and a single international index fund can own most of them.
This guide explains what international index funds hold, how they differ from each other, what they cost, and the arguments for and against owning them. For the numbers, we used the funds’ own filings with the U.S. Securities and Exchange Commission.
The short version: we found 412 index funds that invest in stocks outside the U.S., holding about $2.2 trillion. The broad ones can be very cheap, but the median international index fund charges 0.45% a year, more than the typical U.S. stock or bond index fund.
How big is the rest of the world?
The MSCI ACWI index, a widely used benchmark for the global stock market, covers large and mid-sized companies in 23 developed and 24 emerging markets. As of August 31, 2026, its country weights were: United States 63.59%, Japan 5.09%, Taiwan 3.25%, United Kingdom 3.11%, Canada 3.05%, and all other countries 21.91% (MSCI).
In other words, a little over a third of the value of the world’s stock markets is outside the U.S. An investor who owns only U.S. stocks is leaving that part out.
The main types of international index funds
International index funds come in several flavors:
- Total international funds hold stocks from both developed and emerging markets outside the U.S., usually thousands of them. One fund covers the whole non-U.S. market.
- Developed-market funds hold stocks from wealthier countries with mature markets: Japan, the U.K., Europe, Canada, Australia. Funds tracking the MSCI EAFE index (Europe, Australasia, Far East) are a common example; note that EAFE leaves out Canada.
- Emerging-market funds hold stocks from countries such as China, India, Taiwan and Brazil. They tend to be more volatile.
- Single-country and regional funds focus on one country or region, such as Japan or Europe.
- Global or world funds hold the U.S. and the rest of the world together, like the MSCI ACWI index itself.
Why “developed” and “emerging” depend on the index
Index providers don’t always agree on which countries count as developed. South Korea is the classic example. MSCI still classifies it as an emerging market: in its June 2026 review, MSCI noted that “The Korean won is not deliverable offshore” (MSCI). FTSE Russell, on the other hand, lists South Korea as developed (FTSE Russell).
That’s why two “developed markets” funds can hold different countries depending on whether they follow an MSCI or a FTSE index. It rarely matters if you own a total international fund, which includes both groups anyway.
What we counted
We started from the same census we used to count how many index funds there are in the U.S.: each fund’s most recent annual Form N-CEN filed with the SEC, using the fund’s own answer on whether it’s an index fund. We set aside money market funds, bond funds and 314 leveraged or inverse funds, then identified international stock funds by the words in their names. The groupings are approximate.
| International (ex-U.S.) stock index funds | Global stock index funds (U.S. + international) | |
|---|---|---|
| Number of funds | 412 | 81 |
| Assets | about $2.16 trillion | about $159 billion |
| Share of all index fund assets | 13% | 1% |
| ETFs or funds with an ETF share class | 81% | 90% |
International index fund money is concentrated in a few giant funds. The five largest hold about 49% of all international index fund assets, and funds advised by Vanguard hold about 46%.
By type
| Type | Funds | Assets | Median expense ratio |
|---|---|---|---|
| Broad developed or total international | 122 | about $1.54 trillion | 0.27% |
| Emerging markets | 81 | about $332 billion | 0.39% |
| Single country | 116 | about $134 billion | 0.59% |
| Other (regional, dividend, factor and similar) | 94 | about $160 billion | 0.45% |
Expense ratios are for each fund’s cheapest share class, from the prospectus fee data funds file with the SEC. Groupings are based on fund names.
What international index funds cost
International funds usually cost a little more to run than U.S. funds: trading in foreign markets, holding securities abroad and dealing with currencies all add expenses. Investor.gov notes that “International investing can be more expensive than investing in U.S. companies” (Investor.gov).
Comparing each fund’s cheapest share class:
| International stock index funds | U.S. stock index funds | Bond index funds | |
|---|---|---|---|
| Median expense ratio | 0.45% | 0.35% | 0.12% |
| Asset-weighted average | 0.13% | 0.07% | 0.06% |
| Funds at 0.10% or less | 16% | 19% | 47% |
| Funds above 0.50% | 34% | 28% | 2% |
Excludes leveraged and inverse funds. Categories are based on fund names and are approximate.
The gap between the median and the asset-weighted average tells the story: most of the money sits in a handful of very cheap broad funds, while hundreds of narrower funds charge much more. Single-country funds are the most expensive group, with a median of 0.59%.
Some of the largest broad international index funds
| Fund | Expense ratio | Holdings | Index |
|---|---|---|---|
| Vanguard Total International Stock ETF (VXUS) | 0.05% | 8,755 | FTSE Global All Cap ex US |
| Vanguard Total International Stock Index Fund Admiral Shares (VTIAX) | 0.09% | same portfolio as VXUS | same index as VXUS |
| iShares Core MSCI Total International Stock ETF (IXUS) | 0.07% | 4,585 | MSCI ACWI ex USA IMI |
| Fidelity Total International Index Fund (FTIHX) | 0.06% | 5,074 | MSCI ACWI ex USA IMI |
| Vanguard FTSE Developed Markets ETF (VEA) | 0.03% | 3,868 | FTSE Developed All Cap ex US |
| iShares Core MSCI EAFE ETF (IEFA) | 0.07% | 2,627 | MSCI EAFE IMI |
| Fidelity International Index Fund (FSPSX) | 0.035% | 684 | MSCI EAFE |
| Schwab International Index Fund (SWISX) | 0.06% | 682 | MSCI EAFE |
| Vanguard FTSE Emerging Markets ETF (VWO) | 0.06% | 6,332 | FTSE Emerging Markets All Cap China A Inclusion |
| iShares Core MSCI Emerging Markets ETF (IEMG) | 0.09% | 2,861 | MSCI Emerging Markets IMI |
From each fund’s latest prospectus, fact sheet, shareholder report or website, with data as of dates between April 30 and September 29, 2026. Figures change over time; check the fund’s own page.
Two things stand out. First, the cheapest broad international funds cost only a few hundredths of a percent more than the cheapest U.S. funds. Second, a mutual fund and an ETF from the same company can differ: Vanguard’s Total International Stock fund charges 0.09% in its Admiral mutual fund shares and 0.05% as an ETF. Our comparison of index mutual funds and ETFs explains why that can happen.
Costs matter for the same reasons they do everywhere. Our analysis of what S&P 500 index funds really charge shows how much fees can vary for funds that hold almost the same thing.
The case for international stocks
- Diversification. Investor.gov puts it simply: “International investing may help U.S. investors to spread their investment risk among foreign companies and markets in addition to U.S. companies and markets.”
- Leadership changes over time. Morningstar notes that “non-U.S. stocks have outpaced U.S. stocks for extended periods in the past, such as the mid-1980s and from the late 1990s into the mid-2000s” (Morningstar). In 2025, the MSCI EAFE index of developed markets outside North America returned 31.22% in U.S. dollars (MSCI), well ahead of the S&P 500’s total return of about 17.9% (First Trust).
- Many major fund companies build it in. Vanguard, for example, suggests investors “consider investing about 40% of your stock allocation in international stocks” (Vanguard), roughly in line with the rest of the world’s share of global markets.
The case against, or for owning less
- U.S. stocks have done better for a long time. According to Morningstar, from the start of 2010 through December 2022, “the Morningstar US Market Index gained 12.0% annualized, trouncing the Morningstar Global ex-U.S. Index’s 4.4%.” Schwab noted in 2025 that “over the past 20 years, U.S. stocks have outperformed both international developed and emerging market stocks” (Schwab). Past performance doesn’t tell you which will do better next.
- Currency risk. Your returns depend on exchange rates as well as on stock prices. Investor.gov explains: “When the exchange rate between the U.S. dollar and the currency of an international investment changes, it can increase or reduce your investment return.”
- Other risks. Investor.gov also points to political and economic risks, lower trading volumes in some markets, and less or different information about companies.
- Big U.S. companies are already global. Many large U.S. companies earn a significant share of their revenue abroad, so a U.S. index fund already has some international exposure.
There’s no single correct amount. Some investors hold international stocks in proportion to the world market; others hold less; some hold none. What matters most is choosing a split you understand and sticking with it. International stocks are one of the three pieces of the classic three-fund portfolio.
Taxes: the foreign tax credit
Foreign countries often tax the dividends paid by their companies, and an international fund pays those taxes. In a taxable account, you may be able to get some of that back. The IRS explains that a mutual fund shareholder “may be able to claim the credit based on your share of foreign income taxes paid by the fund if it chooses to pass the credit on to its shareholders” (IRS Publication 514). The amount appears in box 7 of Form 1099-DIV.
Inside an IRA or 401(k), you generally can’t claim that credit. That’s one reason some investors prefer to hold international funds in taxable accounts, as we explain in our guide to Roth IRAs vs. taxable accounts.
How to choose an international index fund
- Decide how broad you want to go. A total international fund covers developed and emerging markets in one purchase. Separate developed and emerging funds let you control the mix, at the cost of more decisions.
- Check the expense ratio. Broad international index funds from the largest fund companies charge well under 0.10%. Hundreds of others charge several times that.
- Check what the index includes. Look at whether it covers small companies, emerging markets and Canada, and whether it follows MSCI or FTSE.
- Check the currency policy. Most international stock funds are unhedged, so currency movements affect your return. Currency-hedged funds exist but usually cost more.
- Consider the account. In a taxable account, the foreign tax credit can be worth something; in a retirement account, it isn’t available.
Common questions
Do I need an international fund if I own an S&P 500 fund? An S&P 500 fund holds only U.S. companies. Whether you add international stocks is a choice about diversification, not a requirement. Many broad portfolios include them.
What’s the difference between “international” and “global”? Usually, an international fund excludes the U.S., while a global or world fund includes it. Always check the fund’s index to be sure.
Is a total world fund a good one-fund alternative? A total world fund holds U.S. and international stocks in market proportions in one fund. It’s the simplest way to own global stocks, although in our count, the median global index fund cost 0.43%, so compare fees carefully.
Are emerging markets worth it? They add more countries and more growth potential, with more volatility and higher costs. A total international fund already includes them in proportion to their market size.
The bottom line
International index funds let you own thousands of companies outside the U.S. in a single, low-cost purchase. The broad funds from the largest fund companies are almost as cheap as U.S. index funds, but the typical international index fund charges much more, so costs deserve a close look. How much to hold abroad is a personal choice; understanding what you own and keeping fees low matters more than getting the percentage exactly right.
This article is general information based on public filings, not personal investment advice. Past performance doesn’t guarantee future results. See our Financial Disclaimer.
Sources and data notes
- SEC, Form N-CEN data sets, 2025 Q3 to 2026 Q2: index fund status, ETF status, adviser and average net assets. Each fund’s most recent report; money market, leveraged and inverse funds excluded. International, global and bond funds and their types identified by fund name (our classification, approximate).
- SEC, Mutual fund prospectus risk/return summary data sets: expense ratios; the cheapest share class of each fund. Medians and averages are our own calculations. Our editorial methodology explains how we count.
- MSCI, MSCI ACWI index fact sheet and MSCI EAFE index fact sheet (as of August 31, 2026); MSCI 2026 Market Classification Review (June 23, 2026).
- FTSE Russell, Country classification matrix (April 2026).
- Investor.gov, International Investing.
- Internal Revenue Service, Publication 514, Foreign Tax Credit for Individuals.
- Vanguard, Why invest internationally.
- Morningstar, Why U.S. Equities Have Beaten International Equities Since 2010; Schwab, Why International and Why Now? (August 12, 2025).
- Fund data: Vanguard fact sheets for VXUS, VTIAX, VEA and VWO; iShares IXUS, IEFA and IEMG; Fidelity FTIHX semiannual report and FSPSX fact sheet; Schwab SWISX.
Data as of the 2026 Q2 SEC data sets. Sources checked on September 30, 2026.