My preferred method of international exposure is through a broad index that may include regional, economic, or fundamental construction methodology. While the results may be watered down with this more diversified strategy, you also aren’t subject to the whims of a more concentrated market.

The iShares MSCI EAFE ETF (EFA) is a popular broad-based international index; however there are also excellent opportunities to drill down to regions such as Europe, emerging markets, or Asia. These wider geographic areas can add alpha over a traditional international benchmark, while still providing attractive diversification qualities across numerous countries, sectors, and market cap styles.

The Vanguard Emerging Market ETF (VWO) is one opportunity that I feel offers a compelling value proposition and long-term growth appeal given the continued strength in global markets.

If you do ultimately decide to invest in single country ETFs for your portfolio, you may benefit from choosing two or three options to balance out your holdings. This will allow for a more focused approach while still retaining a diversified mindset. In addition, using sound risk management practices to guard against significant declines should be a top priority.

The following article was republished with permission from FMD Capital.

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