Exposure to Canada has been conspicuously missing from broad-based international exchange-traded funds, including the $37 billion iShares MSCI EAFE Index Fund ( EFA), which excludes all North American companies. Vanguard plans to remedy that. It's launching an ETF later this quarter that provides similar exposure to international stocks as the iShares MSCI EAFE but allocates 5% of its assets to Canada. The FTSE All-World ex-USA Index Fund will provide exposure to more than 2,000 large-cap and mid-cap stocks from 48 different countries in the developed and emerging markets. It will have an expense ratio of 25 basis points. Vanguard will also be rolling out two mutual fund versions of the product: an investor share class that will have an expense ratio of 40 basis points and an institutional share class that will charge just 15 basis points for shareholders with $5 million to invest. (Unlike exchange-traded funds, which trade throughout the day like stocks, mutual funds can only be purchased or sold once a day.) "If you look at the opportunity for investors outside the U.S., it does include Canada," says Paul Lohrey, Vanguard principal. "For that reason, we think it is important to include Canada in a broad-based index that is essentially a global index ex-the U.S." Lohrey adds that in the past, many investors who wanted truly global exposure paired the iShares MSCI EAFE with an ETF that tracks the S&P 500 (a broad representation of the U.S. market). That worked when the S&P 500 still included a fair number of Canadian stocks. But Canadian stocks were removed from the S&P 500 a few years ago, making the index more of a pure U.S. play. This left some people with a hole in their portfolio.