Do You Really Need International ETFs?

I get asked all the time about investing in international or emerging market ETFs. My honest thoughts? Right now, thanks to Trump’s insane tariffs and the ongoing trade tensions, these funds are doing surprisingly well. That’s because when there’s a trade war, countries that usually export heavily to the U.S. often turn inward. They start focusing on their own economies, their own consumers, and their own industries. The result? Their local stock markets can get a nice boost.

Take a look at VXUS for example. In the last year, the fund is up 14% whereas our S&P 500 ETFs (I’ll use SPLG in my example) are up 13.5%. And Year to Date (YTD), VXUS is up an astonishing 24.33%, whereas SPLG is up 13.14%. Oof.

But … let’s go back a little further. In the last TEN years, VXUS is only up 52% and SPLG is up 219%. A technology fund like FTEC is up 571% in the same 10 years! And even a boring dividend fund like SCHD is up 103%.

If you were more interested in emerging market ETFs, you’d find that their performance is … actually kinda similar to VXUS. VWO is up 22% YTD, 12.69% in the last 12 months, and 48% in the last decade …

We’re seeing international funds reap the short term benefits of Trump’s chaos in real time. Many of these ETFs, which historically have been pretty underwhelming, are suddenly showing strong performance. It’s a good reminder that macro events like tariffs, trade wars, or currency shifts, can reshape global markets in unexpected ways.

That said, I’ve never been a huge fan of international or emerging market ETFs. Here’s why: even though many of the companies I invest in are based in the U.S., they’re global by nature. Think McDonald’s, Starbucks, Johnson & Johnson, Procter & Gamble, Apple, NVIDIA, Microsoft, Netflix — the list goes on. These are American companies, sure, but they earn a massive portion of their profits overseas.

Goldman Sachs reported that about 28% of total S&P 500 revenues in 2024 came from outside the United States!

So in a roundabout way, I’m already getting international exposure without buying international ETFs. My portfolio benefits from global growth through the reach of these U.S. multinationals. And for me, that’s a cleaner, more consistent way to play the global economy without taking on the added risk that often comes with emerging markets.

Of course, that’s just what I think. Other investors might disagree. You might feel more comfortable with international ETFs in your portfolio. In the end, you gotta do what’s best for you.