Could This Be the Key to Foreign Equities Performance in 2026?

Investors are clamoring for foreign equities investments. Foreign equities ETFs performed very well in 2025, and many market outlooks see potential for strong repeat performance in 2026. It may not be straightforward, however, especially for simple, passive, market cap-weighted foreign equities ETFs. By adding one particular wrinkle, certain foreign equities ETFs may be able to provide that stellar foreign equities performance investors are looking for.

See more: 3 Stocks Driving Emerging Markets ETF AVXC’s Hot Start to 2026

Adding a small-cap value view to funds, for example, has boosted foreign equities performance for ETFs like the Avantis International Small Cap Value ETF (AVDV). AVDV has been a standout in the foreign small- and midcap equities ETF Database category over the last year. The fund outperformed all but one ETF in the category, charging less than half the fee of the top fund.

Looking for Foreign Equities Performance? This Fund Offers Insight

The foreign equities performance record for the ETF saw AVDV return 62.3% over the last one year period. That outpaced the average return for the category of 43.8% for the one-year period. The fund has shown its foreign equities performance chops by beating the average over all time periods tracked by ETF Database, from one month to five years.

What about the fund, then, is seeing it consistently outperform, and how can it help in 2026? AVDV’s emphasis on small-cap value may be what helped set it apart from other funds in terms of its foreign equities performance.

Consider how it performed vs. the iShares MSCI EAFE ETF (EFA), for example. EFA holds some of the world’s biggest tech and health care/pharma names. It only returned 33.1% over the last one-year period, however, per ETF Database data — far behind AVDV.

Instead, AVDV’s focus on minerals and key resources won the day. It also uses a systematic active approach rather than simply tracking an index like EFA. That approach empowers its managers to look to fundamental criteria like shares outstanding, revenue, cash flow, and price-to-book value. That has helped it find firms in those materials categories that have done so well, rather than just picking the biggest overall names therein. 

Indeed, moving forward, the fund’s specific focus, rather than a broad foreign equities approach, could help it do well this year, as well. By finding firms in appealing categories with strong underlying fundamental data, AVDV can appeal — especially amid serious geopolitical and global financial market uncertainty.

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