‘Elbows up’ ETFs

Non-U.S. funds for international diversification

Canadians are boycotting U.S. travel, food, and consumer goods. I have not seen any indications that we’re also avoiding American investments, although there have been a few hints that some people are thinking about it.

For example, I received an email recently from a subscriber to my Internet Wealth Builder newsletter that read: “I would like to see more international recommendations that are not U.S. I realize that this may mean forgoing some gains, but “Elbows Up.” – James B.

The obvious difficulty with requests like this is that world trade is in total disarray due to President Trump’s chaotic tariff policies. Until some clear rules are put into place, we have no way of knowing which countries will emerge with preferred access to the U.S. economy. That privilege would greatly improve a country’s trade potential, which in turn would boost its GDP.

With that caveat, here are two foreign ETFs that are holding their own in the current environment and are worth a look for those who want to increase their geographic diversification. Both are recommendations of my newsletter.

BMO MSCI India Selection Equity Index ETF (TSX: ZID). This ETF invests in a portfolio of large-cap companies that is designed to track India’s “nifty fifty” index. The fund was launched in January 2010 and has about $352 million in assets under management. Its MER is 0.67%. The fund gained 6.78% in the year to April 30. The 10-year average annual compound rate of return to an investor was 11.55% to that point.

Distributions are made once a year, in December, and are usually small. The 2024 distribution was $0.143 per unit, most of which was treated as foreign income for tax purposes.

The fund holds 56 positions, but about 46% of the assets are tied up in just four stocks. They are HDFC Bank (17.35%), Reliance Industries (13.29%), Infosys Ltd. (7.86%), and Bharti Airtel (7.45%).

India is still classified as an emerging market, which means the shares of its companies may be more volatile. Investors should also consider the potential impact of U.S. tariffs, although Donald Trump has said he is close to reaching a trade deal with New Delhi.

Aggressive investors might consider ZID for their portfolios.

iShares MSCI EAFE Index (CAD-Hedged) (TSX: XIN). This ETF is the Canadian dollar hedged version of a U.S. fund (NYSE: EFA) that tracks the MSCI EAFE Index. That index covers Europe, Australasia, and the Far East. Most of the fund’s assets are invested in the U.S. version of this ETF. The fund was launched in September 2001 and has about $1.4 billion in assets under management. The MER is 0.49%. The fund is having a decent year, up 3.88% to date. The 10-year average annual compound rate of return is 6.58%.

Distributions are paid semiannually, in June and December. The December payment last year was $0.429 per unit.

This ETF is highly diversified with 697 underlying positions and is more-or-less equally weighted. Japanese stocks make up about 22% of the assets, with about 15% in the U.K.

As for the outlook, here again, much depends on tariffs. Trump has already imposed heavy duties on European cars, but we’re a long way from understanding the full picture.

Investors might look at this fund for long-term growth. Keep a close watch on the impact U.S. tariff policies on these economies.

As always, before investing, consult your financial advisor to ensure the fund aligns with your financial objectives and risk-tolerance level.

Gordon Pape is one of Canada’s best-known personal finance commentators and investment experts. He is the publisher of The Internet Wealth Builder and The Income Investor newsletters, which are available through the Building Wealth website.

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Notes and Disclaimer

Content © 2025 by Gordon Pape Enterprises. All rights reserved. Reprinted with permission. The foregoing is for general information purposes only and is the opinion of the writer. Securities mentioned carry risk of loss, and no guarantee of performance is made or implied. This information is not intended to provide specific personalized advice including, without limitation, investment, financial, legal, accounting, or tax advice. Always seek advice from your own financial advisor before making investment decisions.

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