Global Diversification with One ETF

For investors looking to diversify a portfolio with exposure outside of North America, the BMO MSCI EAFE Index ETF (TSX:ZEA) does essentially that. This ETF invests in stocks around the world with a focus on Europe, providing investors with diversification opportunities due to the relatively high valuations of the S&P and TSX indices currently.

With uncertainty brimming in Canada and increasingly high valuations in both the Toronto and New York exchanges, investors have been increasingly looking outside their borders for investment opportunities that may diversify some of the risks associated with North American equities.

Many high-profile investors have also theorized about the risks associated with putting “all the eggs in one basket,” referring to folks living and working in North America, earning money in North America, and then investing that money in North America. Should another crash happen, or a localized event take place, having a completely undiversified portfolio (from a global perspective) could prove to be a bigger risk than many think.

This ETF provides decent exposure to many of the large global names, and is constructed in a similar manner to the S&P 500 index (weighted for largest names outside North America). A top choice of many money managers looking for global diversification, the EAFE Index ETF is one to consider for an investor looking to branch out and gain some global exposure with relatively low management fees.