This Market-Beating ETF Invests in Markets Outside the U.S.

One way investors can diversify is by investing in various geographical markets. While U.S. stocks are often the most popular investments to buy, there are many solid businesses based outside the U.S. as well. And rather than investing in them individually, investors can get a great group of stocks through an exchange-traded fund (ETF).

The World ex U.S. Core Equity 2 ETF (NYSEArca:DFAX) aims to "achieve long-term capital appreciation while considering federal tax implications of investment decisions." It allocates 68% of its assets on international equity and 32% on emerging stocks. It has exposure to a broad cross-section of sectors as well, with industrials and financials taking up the largest chunks, both at around 16%. The fund invests in many different countries with Japan having the greatest share of its developed portfolio and China being the largest among its emerging investments. Some of the top holding in its fund include Nestle (OTC:NSRGY), Shell (NYSE:SHEL) and Novo Nordisk (NYSE:NVO). However, none of those stocks even account for 1% of the fund's total weight, indicating broad diversification in the ETF.

The 0.25% management fee the fund charges is modest when compared to other ETFs. And year to date, the returns have been strong with the fund up around 9%, slightly outperforming the S&P 500, which is up just under 8% this year. Those returns might not last over the long term but with the U.S. economy looking a bit shaky, the trend could continue this year.

The World ex. U.S. Core Equity 2 ETF can be a useful option to consider if you're an investor looking to diversify your portfolio outside the U.S.