With just a few weeks left in 2025, investors are looking to take observations from 2025 and act on them in the new year. One area that has stood out and may be poised to do so again is international, with 2025 producing robust returns for international ETFs. That category includes numerous different funds, so where should investors look? The T. Rowe Price International Equity ETF (TOUS ) has outperformed in 2025 and could be set to do so again in 2026, as well, for three big reasons.
Ex-U.S. Equities Could Again Stand Out
2025 saw the arrival of a new tariff regime that dominated headlines and market narratives. It also coincided with some strong performances for ex-U.S. equities. Those same equities could once again perform for investors if using the right ETFs. Not only are tariffs still around and potentially growing in impact, but other factors may drive attention abroad, too. Many investors are looking to diversify away from U.S. stocks with looming A.I. concentration risk. A dropping dollar, too, could favor some foreign firms.
Active International ETF Investing Can Get More Out of Ex-U.S. Equities
Active ETFs have come on in leaps and bounds in recent years, offering flexibility and fundamentals-driven investing. It’s that focus on individual firms’ metrics that can help an a active international ETF stand out in foreign markets. Active ETFs and their teams of researchers may have an information advantage over passive, index-tracking peers. Unlike constrained index-based ETFs, active strategies have the flexibility to adapt to changing market environments.
TOUS Offers a Bottom-Up Approach
It’s one thing to say an ETF is active; it’s another to actually invest that way. TOUS offers a bottom-up approach to portfolio construction in the ETF wrapper. Specifically, the strategy invests in companies with quality business models and high growth potential across market capitalizations. Using local market inputs, macroeconomic data, and valuation metrics, the strategy creates a portfolio of about 150 stocks.
The active international ETF has returned 32.5% YTD per ETF Database data, placing it in the upper tier of active international equities ETFs. With momentum entering 2026, the fund could be one to get more out of the theme in the new year.
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