World Map IBM style

Editors' Index Fund Picks - International and Emerging Markets Equity

World Map IBM style

The lists below single out some of favorite index funds covering the international and emerging markets equity asset classes. Many of the funds are based on MSCI's international EAFE index.

Top International Funds - in no particular order
Fund name
Ticker
Expense ratio
Vanguard Tax-Managed International
0.35%
Vanguard Developed Markets Index
0.32%
*iShares MSCI EAFE Index Fund
0.35%
* exchange-traded fund, involves brokerage transaction fees[/:Author:]
Other International Funds - in no particular order
Fund name
Ticker
Expense ratio
Vantagepoint Overseas II
0.48%
Summit EAFE International Index Fund
1.25%
Merrill Lynch International Index D
0.89%
Fidelity Spartan International Index
0.35%
Eclipse EAFE Index
0.94%
E*TRADE International Index
0.65%
Dreyfus International Stock Index
0.60%
TIAA-CREF International Equity
TIINX
0.49%

The table below lists a few quality international growth and value funds.

International Style Funds - in no particular order
Fund name
Ticker
Expense ratio
Vanguard International Growth Fund
VWIGX
0.81%
Vanguard International Value
VTRIX
0.64%
DFA International Value III †
DFIX
0.33%
† advisor-sold fund

Here's a few broad index funds covering international regions.

International Regional Funds - in no particular order
Fund name
Ticker
Expense ratio
Vanguard Pacific Stock Index
0.37%
Waterhouse Asian Index
0.58%
*iShares MSCI Pacific ex-Japan
0.50%
Waterhouse European Index
0.58%
Vanguard Euro Stock Index
0.34%
*iShares S&P Europe 350 Index
0.60%
*iShares S&P Latin America 40 Index
0.50%
* exchange-traded fund, involves brokerage transaction fees

Emerging markets index funds carry plenty of risk but tend not to correlate with the domestic stock market. Emerging markets indexes have performed poorly relative to domestic benchmarks through much of the past decade.

Emerging Markets Funds - in no particular order
Fund name
Ticker
Expense ratio
Vanguard Emerging Markets Stock Index
0.60%
DFA Emerging Markets Portfolio †
0.90%
*iShares MSCI Emerging Markets
TBA
TBA
* exchange-traded fund, involves brokerage transaction fees † advisor-sold fund

For each asset class there are several popular indexes to choose from. Our goal is to identify the funds that track those indexes efficiently and cheaply. None of the funds on our list charge front or deferred loads, or 12b-1 fees. We listed some funds with fairly high fees because investors who choose to work with broker or advisors understand this may be part of how they earn their fees. In the case of both ETFs and funds only available through advisors (such as the Dimensional Fund Advisor or DFA funds) there are additional transaction or holding costs.

Our list is by no means complete, but we think it's a good starting point. We're very interested in comments you might have. We're willing to consider even higher-cost funds for our list, but we need to be convinced. Please post comments to our bulletin boards.

For all lists, the funds are in no particular order and not listed by preference.

Of course, an asset allocation plan is more than just finding good building blocks. They must fit together. But we think this is a good start.