History shows that the S&P/ASX 200 Index (ASX: XJO) can bring average yearly returns around 9%.
Unfortunately for investors, 2026 is shaping up to be a down year.
At the time of writing, Australia's benchmark index is sitting almost in the same position as the start of the year.
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Why international diversification matters
While the Australian share market has delivered strong long-term returns, it makes up only a small portion of the global share market.
That means investors who only own ASX shares are missing out on many of the world's largest and fastest-growing companies.
International diversification can help reduce reliance on the performance of Australian banks, miners, and energy companies, while providing exposure to global leaders in sectors such as technology, healthcare, consumer brands, and artificial intelligence.
It can also smooth portfolio returns when the local market is struggling, as different economies and industries often perform well at different times.
With the ASX 200 treading water in 2026, adding international ETFs could be a simple way for investors to access new growth opportunities and build a more resilient portfolio.
Here are three ideal options to diversify away from Australian equities.
BetaShares Nasdaq 100 ETF (ASX: NDQ)
This ASX ETF is one of the most popular funds for Australian investors and one of the largest by market cap.
The fund aims to track the performance of the Nasdaq 100 Index.
The Nasdaq 100 comprises 100 of the largest non-financial companies listed on the Nasdaq market, and includes many companies that are at the forefront of the new economy.
With its strong focus on technology, NDQ provides diversified exposure to a high-growth potential sector that is under-represented in the Australian sharemarket.
It could be an ideal choice for investors looking to access the dynamic tech sector in the US.
The fund has risen more than 12% year to date.
Vanguard Msci Index International Shares ETF (ASX: VGS)
This ASX ETF from Vanguard is another popular choice amongst investors looking to target international stocks.
It includes roughly 1,300 companies from developed countries, excluding Australia.
The fund provides exposure to many of the world's largest companies listed in major developed countries.
It has provided annual returns of over 10% for the last 5 years.
Vanguard All-World ex-US Shares Index ETF (ASX: VEU)
Another option for investors looking to diversify away from Australian and US stocks is this fund from Vanguard.
The ETF provides exposure to many of the world's largest companies listed in major developed and emerging countries outside the US.
It offers instant diversification with over 3,000 equities in a single trade.
Over the last 5 years, it has provided annualised returns of approximately 10%.
