Single-Country Swagger: Capture Localized Alpha With These ETFs

International equity markets have been exhibiting a profound divergence, offering opportunities for investors willing to look beyond domestic borders. Major broad-market benchmarks present a blended global view. Meanwhile, single-country ETFs allow investors to take part in the upside of these hyper-localized macro trends. From the ongoing demand for artificial intelligence (AI) infrastructure to shifts in industrial production and global commodity cycles, specific nations are attaining alpha in different ways.

• International equities trade at a 31% discount to the U.S. on a forward P/E basis. This is a valuation gap well wide of the historical 20-year average discount of 20%.
• South Korea and Taiwan serve as pure-play technological expressions of the global AI hardware supercycle. Meanwhile Thailand is developing into an AI data center hub.
• Localized economic factors are driving massive returns in Europe and Latin America. This includes the technology infrastructure ecosystem in the Netherlands and the copper and gold production boom in Peru.

See More: AI & “Ex-China” Rewriting the Emerging Markets ETF Playbook

Despite a surging U.S. dollar propelled by higher-for-longer interest rates, international equities are showing remarkable resilience. Courtesy of data from J.P. Morgan, the current phenomenon runs counter to history as shown in the chart below of developed markets against the mighty dollar.

This unusual divergence is driven by robust global corporate earnings that are easily outpacing any currency headwinds from a strong greenback. This is further evident in the year-to-date performance comparison between the MSCI ACWI Ex-USA Total Return Index versus the S&P 500. Again, this is occurring despite a rising dollar.

As mentioned, the global AI boom has supercharged heavily weighted non-U.S. semiconductor giants such as Taiwan Semiconductor Manufacturing and ASML. At the same time, structural corporate governance reforms in countries like Japan and economic recovery in Europe have provided tailwinds for robust earnings.

Furthermore, the J.P. Morgan chart below highlights a severe valuation gap, which makes the prospect of international equities exposure more enticing. U.S. equities trade at a premium 20.4x forward P/E, while non-U.S. equities trade below their average at 14.0×. This represents a massive 31% international discount relative to the U.S., which is substantially wider than the historical 20-year average discount of 20%.

The search for single-country exposure often begins with a look at the best performers. In this case, it’s been South Korea and Taiwan. These two East Asian export powerhouses have effectively become pure-play structural expressions of the global AI hardware supercycle.

Represented by the iShares MSCI South Korea ETF (EWY B), South Korea has evolved from a regional powerhouse into a vital, indispensable technological hub for the entire world. Global hyperscalers are deploying massive capital expenditure programs to scale data centers, which is creating an insatiable demand for next-generation High Bandwidth Memory (HBM). As a result of this demand, it supercharged South Korea’s Samsung Electronics and SK Hynix. Furthermore, capital market reforms aimed at easing foreign investor access and resolving the historical “Korea discount” have further supported the country’s bullish case.

Likewise, the iShares MSCI Taiwan ETF (EWT A-) acts as a highly concentrated play on global semiconductor foundries. Dominated by the aforementioned Taiwan Semiconductor Manufacturing, EWT captures the indispensable hardware layer that’s necessary for AI chip fabrication. Despite the country’s associated geopolitical tail risks, the Taiwan’s geographic moat in leading-edge manufacturing has been a premier driver of robust earnings.

Getting South Korean and Taiwanese equities exposure isn’t isolated to the iShares brand. Franklin Templeton also has an international suite of single-country funds that include the Franklin FTSE South Korea ETF (FLKR B) and Franklin FTSE Taiwan ETF (FLTW A) with competitive expense ratios. FLKR is nine basis points and FLTW is 19 basis points, compared to both iShares ETFs that carry 59 basis points.

Meanwhile, Thailand continues to build its GDP growth through tourism, consumption, and heavy industry. This traditional economic engine is apparent in the top holdings of the or the iShares MSCI Thailand ETF (THD C+), but a forward-looking trend is emerging. Delta Electronics Thailand, the top holding in THD, is a vital global supplier of power management components for EV and AI data centers. Amid the AI buildout, Thailand is looking to position itself as Southeast Asia’s next premier destination spot for hyperscale AI data centers.

Outside of Asia’s digital infrastructure trade are companies catering to the heavy industrial demand and tight global supply chains. In effect, this is fueling a major cyclical resurgence in Latin American markets.

For the country of Peru, the iShares MSCI Peru and Global Exposure ETF (EPU B) concentrates its total highly concentrated portfolio of just 25 holdings (as of July 13, 2026) directly into materials, placing its primary bets on physical copper and gold production. With the global transition that features a heavier reliance on electricity, this trend will drive Peru’s economy.

Colombia bucks the trend of the aforementioned single-country ETFs. It does not have iShares representation (a previous ICOL ETF was closed in 2022). Instead, the Global X MSCI Colombia ETF (COLO A-) stands as the country’s sole ETF representative with a heavy lean into the energy sector. Along with state-backed energy giants, the fund also includes financials and utilities.

Rounding out the top global markets are Western and Central European hubs with specialized industrial advantages. In the case of the Netherlands, represented by the iShares MSCI Netherlands ETF (EWN B), the fund owes much of its YTD performance to its embedded technology ecosystem. More specifically, ASML, which is the world’s sole provider of extreme ultraviolet (EUV) lithography machines necessary for printing advanced microchips. It occupies over a quarter of the fund’s allocation with a 26% weight (as of July 13, 2026).

Meanwhile, Austria provides balanced exposure to defensive, low-beta financial networks and industrials operating across Central and Eastern Europe. This is apparent in the iShares MSCI Austria ETF (EWO B) where half of the fund’s top holdings are indeed represented by the financial sector.

Driven by robust, localized corporate earnings and structural, tech-fueled tailwinds, global markets are offering investors a plethora of ETF opportunities. When you couple this fundamental strength with the current valuation gap, the case for international exposure becomes even more compelling.

While broad global allocation has its place for wealth building through ETFs like the Vanguard Total International Stock ETF (VXUS A) or iShares Core MSCI Total International Stock ETF (IXUS A+), the current market environment also rewards precision. Investors are both diversifying and capturing the hyper-localized growth engines that are actively reshaping the global economy.

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