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International ETFs beat U.S. benchmarks as tech concentration hurt SPY, QQQ vs VEA, EZU, AIA.
Lower valuations abroad fueled gains; VGK, EWJ, EEM trade at big P/E discounts to U.S. ETFs.
High-dividend global ETFs led returns, with FDT, IDV, EFAS delivering strong income growth.
Wall Street experienced quite a volatility in 2025, while international markets remained relatively stable or gained momentum. Trade uncertainty under the Trump U.S. administration has fueled concerns about rising inflation and a slowing U.S. economy, which has worked in favor of international markets. Agreed, international economies, too, faced uncertainties related to Trump tariffs, but the blow on their markets proved to be less severe than what it was for the U.S. market.
Tech Concentration Risks
Also note that the artificial intelligence (AI) behemoths of the United States — the magnificent seven stocks or the main driving factor of Wall Street in recent years — faced overvaluation concerns and investor worries about payoffs during the year, at times weighing heavily on tech-centric indexes. The Mag 7 group makes up about one-fourth of the S&P 500, while the tech stocks are also the heavier part of the Nasdaq 100.
Christoph Schon, lead principal of investment decision research at Danish investment management firm SimCorp, told CNBC last month that against the Mag-7, Europe’s STOXX Europe 600 has a more balanced structure, with its top 10 stocks making up only 17% of the index’s market cap and hail from diverse sectors like technology, healthcare, energy, finance, and consumer goods, as quoted on the same CNBC article.
2025 Performance Scorecard of U.S. & International ETFs
Note that Roundhill Magnificent Seven ETF MAGS is up 23.9% so far this year (as of Dec. 19, 2025), while SPDR S&P 500 ETF Trust (SPY - Free Report) has gained 16.4%. The tech-heavy Invesco QQQ Trust, Series 1 (QQQ - Free Report) is up about 21% while SPDR Dow Jones Industrial Average ETF Trust (DIA - Free Report) has advanced 13.5% in 2025 so far.
Vanguard Tax Managed Fund FTSE Developed Markets ETFVEA is up 29.6% this year. Meanwhile, iShares Asia 50 ETF (AIA - Free Report) has jumped about 40% in 2025, and iShares MSCI Emerging Markets ETF (EEM - Free Report) has advanced 28.6%. iShares MSCI Eurozone ETF (EZU - Free Report) has jumped 36.2%. iShares MSCI ACWI ex US ETF ACWX has grown by 27.7% in price. It means all these international indexes fared better than the key U.S. indexes in 2025.
Apart From Diversification, What Drove International ETFs
Cheaper Valuation: Most international markets and ETFs were undervalued in comparison to U.S. stocks and ETFs. The P/E ratio (trailing twelve months) of EZU stands at 17.68X (per Yahoo Finance), while its U.S. counterpart — Vanguard S&P 500 ETF (VOO - Free Report) — trades at a P/E of 28.86X.
iShares MSCI Japan ETF (EWJ - Free Report) has a P/E ratio of 16.33X. The ETF EEM trades at a P/E of 15.54X. iShares China Large-Cap ETF (FXI - Free Report) trades at a P/E of 10.69X. iShares India 50 ETF (INDY - Free Report) has a P/E of 22.18X while iShares MSCI Brazil ETF (EWZ - Free Report) has a P/E of 10.50X.
Stimulus Abroad: The European Central Bank was on a rate-cut spree earlier in the year. Despite cutting rates at the start of 2025, the ECB halted policy easing due to trade uncertainty in the middle of the year. India and China have also been on a path of policy stimuli (either fiscal or monetary or both). Although the Bank of Japan has been hiking rates, the interest rate backdrop remains low.
In contrast, the United States took a different approach as the Department of Government Efficiency has prioritized budget cuts, reducing federal expenditures rather than expanding them. The Fed stayed put till August and enacted three rate cuts from September.
Top-Performing International ETFs in Focus
Against this backdrop, below we highlight a few winning foreign exchange-traded funds (ETFs) of 2025. Investors should note that high-dividend ETFs outperformed.
First Trust Developed Markets ex-US AlphaDEX Fund FDT – Up 46%, Yields 3.30% annually
The underlying NASDAQ AlphaDEX Developed Markets Ex-US Index is a modified market capitalization-weighted index that employs the AlphaDEX stock selection methodology to select stocks from the NASDAQ Developed Markets Ex-US Index. The key geographic holdings are Japan (29.13%), South Korea (14.01%) and Canada (12.40%).
iShares MSCI Israel ETF EIS – Up 45.1%, Yields 1.42% annually
The underlying MSCI Israel Capped Investable Market Index consists of stocks traded primarily on the Tel Aviv Stock Exchange. It is a modified capitalization-weighted index that aims to capture 99% of the total market capitalization.
iShares International Select Dividend ETF (IDV - Free Report) – Up 42.4%, Yields 5.01% annually
The underlying Dow Jones EPAC Select Dividend Index measures the performance of a select group of equity securities issued by companies that have provided relatively high dividend yields on a consistent basis over time. The ETF is heavy on the U.K. (20.15%) and Italy (11.10%).
Invesco RAFI Developed Markets ex-U.S. ETF PXF – Up 37.1%, Yields 2.96% annually
The underlying RAFI Fundamental Select Developed ex US 1000 Index tracks the performance of the largest developed market equities, excluding the United States, based on the following four fundamental measures of firm size: book value, cash flow, sales and dividends. Japan (23.35%) and the United Kingdom (11.36%) are the two top positions in the fund.
Global X MSCI SuperDividend EAFE ETF EFAS –Up 36.7%, Yields 4.91% annually
The underlying MSCI EAFE Top 50 Dividend Index invests in 50 of the highest-yielding equity securities from international developed markets across Europe, Australasia, and the Far East. France, Hong Kong, Britain and Italy have double-digit weights in the fund.
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Top-Performing International ETFs of 2025
Key Takeaways
Wall Street experienced quite a volatility in 2025, while international markets remained relatively stable or gained momentum. Trade uncertainty under the Trump U.S. administration has fueled concerns about rising inflation and a slowing U.S. economy, which has worked in favor of international markets. Agreed, international economies, too, faced uncertainties related to Trump tariffs, but the blow on their markets proved to be less severe than what it was for the U.S. market.
Tech Concentration Risks
Also note that the artificial intelligence (AI) behemoths of the United States — the magnificent seven stocks or the main driving factor of Wall Street in recent years — faced overvaluation concerns and investor worries about payoffs during the year, at times weighing heavily on tech-centric indexes. The Mag 7 group makes up about one-fourth of the S&P 500, while the tech stocks are also the heavier part of the Nasdaq 100.
Christoph Schon, lead principal of investment decision research at Danish investment management firm SimCorp, told CNBC last month that against the Mag-7, Europe’s STOXX Europe 600 has a more balanced structure, with its top 10 stocks making up only 17% of the index’s market cap and hail from diverse sectors like technology, healthcare, energy, finance, and consumer goods, as quoted on the same CNBC article.
2025 Performance Scorecard of U.S. & International ETFs
Note that Roundhill Magnificent Seven ETF MAGS is up 23.9% so far this year (as of Dec. 19, 2025), while SPDR S&P 500 ETF Trust (SPY - Free Report) has gained 16.4%. The tech-heavy Invesco QQQ Trust, Series 1 (QQQ - Free Report) is up about 21% while SPDR Dow Jones Industrial Average ETF Trust (DIA - Free Report) has advanced 13.5% in 2025 so far.
Vanguard Tax Managed Fund FTSE Developed Markets ETF VEA is up 29.6% this year. Meanwhile, iShares Asia 50 ETF (AIA - Free Report) has jumped about 40% in 2025, and iShares MSCI Emerging Markets ETF (EEM - Free Report) has advanced 28.6%. iShares MSCI Eurozone ETF (EZU - Free Report) has jumped 36.2%. iShares MSCI ACWI ex US ETF ACWX has grown by 27.7% in price. It means all these international indexes fared better than the key U.S. indexes in 2025.
Apart From Diversification, What Drove International ETFs
Cheaper Valuation: Most international markets and ETFs were undervalued in comparison to U.S. stocks and ETFs. The P/E ratio (trailing twelve months) of EZU stands at 17.68X (per Yahoo Finance), while its U.S. counterpart — Vanguard S&P 500 ETF (VOO - Free Report) — trades at a P/E of 28.86X.
iShares MSCI Japan ETF (EWJ - Free Report) has a P/E ratio of 16.33X. The ETF EEM trades at a P/E of 15.54X. iShares China Large-Cap ETF (FXI - Free Report) trades at a P/E of 10.69X. iShares India 50 ETF (INDY - Free Report) has a P/E of 22.18X while iShares MSCI Brazil ETF (EWZ - Free Report) has a P/E of 10.50X.
Stimulus Abroad: The European Central Bank was on a rate-cut spree earlier in the year. Despite cutting rates at the start of 2025, the ECB halted policy easing due to trade uncertainty in the middle of the year. India and China have also been on a path of policy stimuli (either fiscal or monetary or both). Although the Bank of Japan has been hiking rates, the interest rate backdrop remains low.
In contrast, the United States took a different approach as the Department of Government Efficiency has prioritized budget cuts, reducing federal expenditures rather than expanding them. The Fed stayed put till August and enacted three rate cuts from September.
Top-Performing International ETFs in Focus
Against this backdrop, below we highlight a few winning foreign exchange-traded funds (ETFs) of 2025. Investors should note that high-dividend ETFs outperformed.
First Trust Developed Markets ex-US AlphaDEX Fund FDT – Up 46%, Yields 3.30% annually
The underlying NASDAQ AlphaDEX Developed Markets Ex-US Index is a modified market capitalization-weighted index that employs the AlphaDEX stock selection methodology to select stocks from the NASDAQ Developed Markets Ex-US Index. The key geographic holdings are Japan (29.13%), South Korea (14.01%) and Canada (12.40%).
iShares MSCI Israel ETF EIS – Up 45.1%, Yields 1.42% annually
The underlying MSCI Israel Capped Investable Market Index consists of stocks traded primarily on the Tel Aviv Stock Exchange. It is a modified capitalization-weighted index that aims to capture 99% of the total market capitalization.
iShares International Select Dividend ETF (IDV - Free Report) – Up 42.4%, Yields 5.01% annually
The underlying Dow Jones EPAC Select Dividend Index measures the performance of a select group of equity securities issued by companies that have provided relatively high dividend yields on a consistent basis over time. The ETF is heavy on the U.K. (20.15%) and Italy (11.10%).
Invesco RAFI Developed Markets ex-U.S. ETF PXF – Up 37.1%, Yields 2.96% annually
The underlying RAFI Fundamental Select Developed ex US 1000 Index tracks the performance of the largest developed market equities, excluding the United States, based on the following four fundamental measures of firm size: book value, cash flow, sales and dividends. Japan (23.35%) and the United Kingdom (11.36%) are the two top positions in the fund.
Global X MSCI SuperDividend EAFE ETF EFAS –Up 36.7%, Yields 4.91% annually
The underlying MSCI EAFE Top 50 Dividend Index invests in 50 of the highest-yielding equity securities from international developed markets across Europe, Australasia, and the Far East. France, Hong Kong, Britain and Italy have double-digit weights in the fund.