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A recent research paper by a group of finance experts posited that international stocks are a better diversifier for a long-term portfolio than bonds.

While the returns for some of the leading international stock indexes have fallen short of the S&P 500 this year, in recent years they have been less volatile, making international stocks a solid option to diversify against U.S. equities.

International stocks cast a wide net, accounting for all stocks outside of the U.S., but they can be focused on a specific country or region as well. An excellent vehicle to tap into international markets is through an international exchange traded fund (ETF). Here are the top 3 international ETFs.

1. Invesco S&P International Developed Momentum ETF

The Invesco S&P International Developed Momentum ETF (NYSEARCA: IDMO) has been one of the best performing international ETFs over both the short-term and the long-term. Through the end of November, the ETF was up 17% year to date and 22% over the past 12 months. Also, it has a five-year annualized return of 12.4%, which is comparable to the S&P 500 over that stretch.

This ETF follows the S&P World Ex-U.S. Momentum Index, which includes stocks from developed nations excluding the U.S. and South Korea that have the highest price return momentum scores based on the index’s methodology for measuring them.

It holds about 193 stocks from mostly 10 developed international markets, with the largest concentration, 26%, from Japan. Germany represents about 11% followed by Canada at 10%, and Australia and the U.K. stocks at 9% each.

Stocks are mostly large cap growth (45%) or large cap blend (31%). Further, about 40% are in financials, followed by 21% in industrials and 10% in technology. Further, 7% are in healthcare while 5% is in communication services.

Its five largest holdings are SAP SE (NYSE: SAP), Novo Nordisk A/S (NYSE: NVO), Commonwealth Bank of Australia (ASX: CBA), Mitsubishi UFG Financial (NYSE: UFJ), and Hitachi (OTC: HTHIY).

2. First Trust IPOX Europe Equity Opportunities ETF

The First Trust IPOX Europe Equity Opportunities ETF (Nasdaq: FPXE) has been one of the best performing international ETFs this year, returning 21% YTD through November 29 and 28% over the past 12 months. Its five-year annualized return of about 7%, which is slightly below the Invesco ETF, as it is a bit more volatile.

Currently, there are about 100 holdings with the median market cap of $3.4 billion, which would be in the mid cap range.

About 23% of the ETF includes stocks from Sweden, followed by 15% from the U.K. and 12% from Germany. Further, roughly 20% is in technology stocks while 16% each are in healthcare and industrials and 13% is in financials.

The five largest holdings are Arm Holdings (Nasdaq: ARM), Spotify (NYSE: SPOT), On Holdings AG (NYSE: ONON), Gen Digital (Nasdaq: GEN), and Monday.com (Nasdaq: MNDY).

3. Invesco Dorsey Wright Developed Markets Momentum ETF

The Invesco Dorsey Wright Developed Markets Momentum ETF (Nasdaq: PIZ) is another top performer, returning 20% YTD and 27% over the past 12 months. It also has a five-year annualized return of 8.3% as of November 29.

This ETF tracks the Dorsey Wright Developed Markets Technical Leaders Index, which includes approximately 100 companies that possess powerful relative strength characteristics, based on Dorsey, Wright & Associates proprietary methodology. The methodology examines the performance of each of the approximately 1,000 largest companies in the eligible universe as compared to a benchmark index.

About 19% of the stocks are domiciled in Canada, followed by 15% from the U.K. and 12% from Switzerland. About two-thirds are in large cap names, primarily large cap growth, while one-third is in mid cap stocks, most mid cap growth.

Roughly 34% are in industrials followed by 27% in financials and 11% in technology. The top 5 holdings are Intercontinental Hotels Group (NYSE: IHG), Constellation Software (CSU.TO), Descartes Systems Group (Nasdaq: DSGX), REA Group (ASX: REA), and Belimo Holding AG (BEAN.SW).

These three ETFs cover a range of different international stocks, with little overlap, and all have been top performers. They could serve as good diversifiers in a long term portfolio.

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