The latest ETF data is in with the end of January, kicking 2026 off with a bang. International equities saw record flows for the month, solidifying a strong trend for the category. Will that strong ex-U.S. equities appeal continue throughout 2026, building on strong numbers in 2025? There is a case for the category to do so, with active ETFs offering powerful routes into the space.
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Just how much, specifically, did ex-U.S. equities ETFs pull in? An ETF flows report from State Street Investment Management found that the ETF category picked up a record $60 billion. Remarkably, that total significantly outpaced U.S. equity ETFs, which added $38 billion in net inflows. Within those numbers, emerging markets ETFs added a record, as well; $21 billion flowed to EM equities ETFs.
Together, U.S.-listed ETFs saw $165 billion in inflows, itself a record for January and “more than the last three Januarys combined,” according to SSIM Global Head of Research Strategists Matt Bartolini. What, then, should investors make of that data?
There is a strong case for ex-U.S. equities to continue to play a positive role in portfolios. Domestic U.S. uncertainty looms over U.S. equities, from A.I and concentration risk to central bank issues and interest rate questions.
Adding exposure to global markets outside the U.S. offers diversification from A.I.-heavy portfolios as well as upside in its own right. Emerging markets firms in areas like materials and metals have stood out, while a declining dollar has boosted the prospects of companies from several regions.
Active ETFs offer tools for investors to apply bottom-up portfolio construction to those markets. Where passive funds track relatively simple, market cap-weighted indexes, active ETFs investing abroad leverage fundamental research to get a better lay of the land.
The T. Rowe Price International Equity ETF (TOUS ), for example, could offer a strong option to add active ex-U.S. equities exposure. Charging 50 basis points, TOUS actively invests in about 150 stocks in ex-U.S. developed markets. Its managers emphasize high earnings potential and good valuation metrics as well as local market information. That has helped the fund return 30.5% over the last one year period per ETF Database data.
Looking ahead, ex-U.S. equities ETFs could continue to appeal. For those considering adding exposure, it may be worth checking out the active side of the menu to get more out of an allocation therein.
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