Could now be the time to diversify abroad with an active international equity ETF? Active ETFs have become key parts of numerous portfolios in recent years. With both an accelerating number of active ETF launches and overall category AUM, the active fund type is now a serious consideration for many investors. With U.S. volatility rising, they could play a particularly strong role as a vehicle for equity diversification.
See more: Don’t Settle for Just Any Current Income ETF: Try This
A fund like the T. Rowe Price International Equity ETF (TOUS ), for example, could do the trick. The active international equity ETF has had a strong start to 2025. The strategy had added more than $500 million in net inflows since the start of the year. To what might investors attribute those flows?
A significant portion already came in as of March, even before concrete news related to tariffs had arrived. That may have owed to existing concerns about U.S. concentration risk. Last year, just a handful of firms drove a preponderance of market performance. Investors may have looked to an active international equity ETF like TOUS even before tariffs to avoid that heavy U.S. tech concentration risk.
Now, however, the topic of tariffs look set to cause ongoing volatility to the stock market. That, too, could see investors looking for international diversification. An active international equity ETF may have an advantage with its ability to provide tight scrutiny of foreign firms.
For example, TOUS can lean on T. Rowe Price’s global research platform to take a closer look at foreign firms’ fundamentals in a way that passive index strategies simply can’t. What’s more, active adaptability can help in foreign markets if macro events take a turn for the worst.
The fund has returned 9.1% over the last year, per T. Rowe Price data. That has outperformed its benchmark, the MSCI EAFE Index Net in that time. Altogether, TOUS could be a strong option for investors looking for a serious active international equity ETF.
For more news, information, and analysis, visit our Active ETF Channel.
