Australian investors have plenty of opportunities for capital growth with domestic stocks.
However, some investors might not be aware the Aussie market is heavily weighted towards big banks and mining companies.
In reality, the S&P/ASX 200 Index (ASX: XJO) is one of the most concentrated developed-market indices on the planet.
According to VanEck, the top 5 securities account for roughly 32% of the ASX 200 Index.
This means that many investors might be overexposed to the performance of these blue-chip stocks without realising.
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Why international ETFs make sense
A key point to remember is that diversifying internationally doesn't necessarily mean abandoning the ASX.
An Australian investor can retain domestic exposure while using ASX-listed international ETFs to broaden their portfolio.
This can transform a portfolio that is heavily dependent on Australian banks and miners into one with much broader exposure to the global economy.
Sectors like technology and healthcare are underrepresented here in Australia.
By targeting international ASX ETFs, Aussie investors can gain exposure to these underrepresented markets.
In short, the more concentrated the home market, the greater the potential benefit from looking beyond it.
For Australian investors, international ASX ETFs can complement domestic holdings by diversifying sectors, companies, economies, and sources of growth.
With that in mind, here are three international funds that can provide instant geographic diversification.
Vanguard MSCI Index International Shares ETF (ASX: VGS)
This is one of the most popular internationally focused ASX ETFs.
It complements an Australian-dominated portfolio as it includes 1,300 companies from 23 developed countries, excluding Australia.
The fund offers greater access to sectors such as technology and health care that aren't as well represented in the Australian share market.
In the last 5 years, it has risen more than 54%, vastly outpacing the ASX 200.
iShares S&P 500 ETF (ASX: IVV)
Another popular fund focused on overseas equities is this ASX ETF from iShares.
The fund aims to provide investors with the performance of the S&P 500 Index (SP: .INX), before fees and expenses.
The index is designed to measure the performance of large capitalisation US equities.
Its high growth profile is heavily weighted towards technology companies, including Nvidia and Apple.
In the last 5 years, it has increased by an impressive 70%.
BetaShares Nasdaq 100 ETF (ASX: NDQ)
For investors looking for a more highly concentrated US exposure, this fund is an ideal candidate.
It aims to track the performance of the NASDAQ-100 Index (NASDAQ: NDX) (before fees and expenses).
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.
In the last 5 years, it's enjoyed a rise of roughly 75%.
