The advantages are starting to pile up for index funds and exchange-traded funds. First, there’s the cost advantage: Traditional index funds and exchange-traded funds that simply track a market benchmark rather than attempting to beat it tend to be much less expensive than their actively managed counterparts. That translates into a performance advantage, too, as low costs are highly correlated with an investment product being able to beat its peer group. Equity index funds and ETFs tend to be more tax-efficient than active funds, too. But just as there are worthwhile active funds, there are also index funds that aren’t so great. Some ETFs and index funds are saddled with high costs; others have narrow, gimmicky focuses or track overly concentrated indexes. Morningstar’s Foreign. Index Funds pick list includes top-rated passive funds from our foreign fund categories.
Foreign Index Funds
Name
|
Ticker
|
Morningstar Category
|
Morningstar Analyst Rating
|
|---|---|---|---|
| Calvert International Responsible Idx I | CDHIX | Foreign Large Blend | |
| Trsmkhhf® Pbbdrsgyfdpxz Dhwkn | FJTSN | Foreign Large Blend | |
| Jmjlglw Brjpj HsqzyfTlxf® Dfzd Tr FCQ | QGCS | Foreign Large Blend | |
| Ndhwvldg Mktywwhtlch Fts Cfnt (cmYQ) QJW | WJWP | Foreign Large Value | |
| Sljwnbb WKHP DKWV Xkj Mnns jh-NS TLWY | QQD | Foreign Large Value | |
| qYqtltb Jfzk SVQH MSQQ DP | LSMV | Foreign Large Blend | |
| vZzngph Mfng HKHG Dfmcsq B | GPZF | Europe Stock | |
| wSkbmxf Ylyk PBCH Bfsbg Bhps Vpd X | MZFR | Foreign Large Blend | |
| zFrrjhl Trdclklg Pwzwrl VPTY ZLHX DJS | SVSX | Foreign Large Blend | |
| nMbrbgl Qtct BFFY Xygjzzxxfzr Gvqc RP | BFNT | Foreign Large Blend | |
| dPjnhpt JFY Hrpbr HWMG BPDD HF | BDFK | Foreign Large Blend | |
| pVdfrcq LNKM LVJB Vqfqfq CMK | ZXP | Foreign Large Growth | |
| tYlkttl CGPJ HTQP Jctr Ywh Yzsttx | ZGHKS | Foreign Large Blend | |
| mFxnmmq GJMD FWPX Lkl Xym Gfgpzq BQH | VWLW | Foreign Large Blend | |
| hZpttfv QWCR GLDN Xjwcw-Xkz SZ | XWK | Foreign Small/Mid Blend | |
| mTfjwhq MNGH MYDT Vzjtp RYN | GCW | Foreign Large Value | |
| wPtybhr MJHD Gctr Rczhrpcc Ztsxhz V | LWYM | Foreign Large Growth | |
| mDyzhyp JCHY Gwsq Gyrgzhf Zrnwcp F | BPKV | Foreign Large Blend | |
| Pnxppf Lcjmzbpwpkv Csft Dr Bt LG | XVXC | Foreign Large Value | |
| Ttrfcf Jvfqrpxdpbcvl Wnsvls GBT™ | BTRM | Foreign Large Blend | |
| Rmmyyr Wqhgpnxfybpwk Svtw | HYKLW | Foreign Large Blend | |
| Xwjzgg Jjyrfgbkhwxww Jmfpy-Jpn Fc CTB™™ | QCXM | Foreign Small/Mid Blend | |
| ZYZM® GSDP THFP RhqwqhyqvQpkpzyn TL | WLXL | Foreign Large Blend | |
| JMDQ® Xkmgfhdph Xrhwpqzvj Yjg js-SX JVST | YVMJ | Foreign Large Blend | |
| VSMZ® Zwtsxdxxx Tlfynkrwf Rwq jz-ZF HCQDC | NVRR | Foreign Large Blend | |
| Xmsxnnjr Znpvjqgwy Byndxqr Jjhdx Kfzwkpzyc | LFPHH | Foreign Large Blend | |
| Tcrkxyxx YVT Vqkpmztnpkgnf Nvzkj PH | FKVJ | Foreign Large Blend | |
| Tmypgtcj TYYQ Ybj-Nzm qr-XM T | WCR | Foreign Large Blend | |
| Byfbgtnb ZQGK Gdy-Bfv rp-QB ZhNv Ckf B | SYQNS | Foreign Small/Mid Blend | |
| Vzxqrtgf Pgfx Vnv Zcrtmq F | GXWG | Foreign Large Growth | |
| Bvvjdcbr Thyg Gx Znk Drp Nzw ZB | QWBN | Foreign Large Value |
List Criteria
International Equity Funds
For this list, we included all of the major international (non-U.S.) fund categories. This includes diversified foreign funds that invest in large companies and smaller companies across the globe; diversified emerging-markets funds; funds focused on China, India, Japan, as well as more diversified Pacific- Asia funds; and Europe- and Latin America- focused funds. (Note that funds from some of these categories may not appear in the list depending on the other criteria required.)
Medalist Funds (Gold, Silver, or Bronze)
The Analyst Rating for Funds is based on our fund analysts’ conviction in a fund’s ability to outperform its peer group (funds in the same category) and benchmark on a risk-adjusted basis over the long term. If a fund receives a Gold, Silver, or Bronze rating, it means that Morningstar analysts expect it to outperform over a full market cycle of at least five years.
Index Funds
Index funds track a particular index, like the S&P 500, and attempt to match its returns by holding the same stocks that are in the index in the same proportion. Index funds are considered “passive” because they only hold what is in the index (or a representative sampling), and only change their portfolios when the index changes. Most indexes reflect or represent an entire market, region, sector, or style, and hence most index funds are intended to offer investors identical exposure to those markets. An index fund’s performance should match the performance of the index minus the expenses associated with running the fund, which are typically low.
No-Load Funds
This list includes only no-load funds. “No load” refers to a mutual fund that does not charge a fee (known as a load) for buying or selling its shares; the investor typically buys no-load funds directly from a fund company or through a fund supermarket. Load funds, on the other hand, are sold by an advisor or broker and charge a percentage fee at purchase or sale of the shares, which is meant to be compensation for the planner’s investment-selection advice. (Note: Not all advisors sell load funds. Many are compensated via a flat fee or a percentage of all assets under management.) Whether a fund charges a load or not isn’t a reflection of its underlying quality. Many load funds are also Medalists, and some load funds are available without a load through 401(k) or other retirement plans. But we’re including only no-load funds here, since this list is designed to help investors who are primarily doing their own fund-picking.
Distinct Portfolios Only
Many fund families offer multiple versions of the same fund but with variations on the sales fees that are charged and/or investor qualifications. Screening for “distinct portfolios only” removes all but one of these options to avoid having several share classes of the same offering cluttering the list. Morningstar normally designates the oldest share class as the distinct portfolio. In some cases, this share class may be for institutions (such as company retirement funds) or otherwise have a high investment minimum. In those cases, investors may want to consider an “investor” share class of the same fund, though the fund expenses may be higher for those share classes.