Will 2025 See International Equities ETFs Perform Once Again?

If asked to pick a big story for markets in 2025 outside of A.I., it’s hard to look past the consistent strength of international equities ETFs. Investors have clamored for ex-U.S. equities this year amid concerns about domestic stocks. Whether diversifying away from A.I.-driven concentration risk or just looking for performance, international equities ETFs have largely rewarded investors — but can they repeat that performance in 2026.

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There is certainly a case to be made for continued positivity for international equities ETFs. For starters, concentration risk in the U.S. stock market remains a key concern for investors. Foreign diversification can avoid other U.S. risks like a shifting yield curve and declining dollar that make domestic sources of diversification less appealing. 

What Does 2026 Hold for International Equities ETFs?

What’s more, foreign markets have plenty of appeal on their own. A weakening dollar has its own impact on U.S. domestic economics, but it could benefit investors that look abroad due to currency discrepancies. Factors like monetary policy changes, doubts over the independence of the Fed, and spiraling deficits in the U.S. all may weaken the dollar further.

Many foreign markets are also, importantly, further ahead of the U.S. in cutting cycles and have done better at taming inflation since the COVID-19 pandemic. That may present fertile ground for U.S. investors.

Of course, international equities is a very large space to assess, with many differing outcomes and possibilities therein. It would not surprise, for example, if a given foreign market underperforms its 2025 numbers but has individual firms build on a strong previous year. Active international equities ETFs provide some helpful tools to find those opportunities across multiple markets. 

Funds like the T. Rowe Price International Equity ETF (TOUS) offer an example. TOUS leans on the firm’s fundamental research capabilities to invest in equities from around the world. So, even while certain markets may fade, an active ETF that does not have to follow tight weighting requirements could outperform passive peers as foreign equities look for a strong year again in 2026.

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