U.S. Equities Lag International in 2025: 5 Top ETF Performers

As 2025 crawls to its end, one winning investment trend of this year looks geared up to move into next year — skepticism about going heavy on American assets. iShares MSCI ACWI ex US ETF ACWX, which tracks the global stock market (excluding the United States), has surged 26.7% so far this year versus 14.8% gains in the SPDR S&P 500 ETF Trust SPY.

Although U.S.-China trade tensions eased a lot lately and the Fed started cutting rates this year in September, SPY (down 0.03%) underperformed ACWX (up 0.5%) over the past month (as of Nov. 7, 2025).

Why is Invest-In-America Thesis Wobbling?

The shift toward international began in April, when U.S. President Donald Trump’s so-called “Liberation Day” sent markets into turmoil, triggering a widespread selloff of U.S. stocks, government bonds, and the dollar. The movement quickly led many investors to dump U.S. trade.

This was followed by some trade negotiations. Some policy announcements were later rolled back, further offering investors less insight into the future course. Although Wall Street’s subsequent rebound to record highs erased market losses to a large extent, many investors remain wary of the sustainability of U.S. market rally amid shifting policy statements.

According to Daniel Coatsworth, head of markets at AJ Bell, two reasons can be held responsible for the U.S. market losing its appeal currently. While uncertain policy sentiment is a significant factor, overexposure to U.S. assets is another, as quoted on CNBC.

Tech Concentration Risks

Apart from the two above-mentioned factors, there are AI-led bubble fears and overvaluation concerns affecting the big U.S. equity indexes. The “Magnificent 7” — Apple, Amazon, Alphabet, Meta, Microsoft, Nvidia, and Tesla — now make up roughly one-third of the S&P 500’s total market capitalization. These companies can be seen as the ongoing AI growth engine (read: Fearing AI Valuation Concerns? Tap 3 High-Dividend ETFs).

Christoph Schon, lead principal of investment decision research at Danish investment management firm SimCorp, told CNBC 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.

Cheaper Valuation of International Equities

The ACWX traded at a price-to-earnings multiple of 18.44X (as of Nov. 7, 2025) versus iShares Core S&P 500 ETF IVV’s P/E multiple of 29.89X. This shows how undervalued international equities ETFs are, even after the recent rally.

Since international equities are likely to hit 2026 on this subdued valuation and more certain economic prospects, international equities ETFs are likely to rally in the initial phase of 2026 as well.

Best-Performing International Equities ETFs of 2025

First Trust Developed Markets ex-US AlphaDEX Fund FDT – Up 41.2% YTD

iShares International Select Dividend ETF IDV – Up 37.7% YTD

First Trust Developed Markets ex-US Small Cap AlphaDEX Fund FDTS – Up 37.6% YTD

Global X MSCI SuperDividend EAFE ETF EFAS – Up 31.5%

Franklin FTSE Eurozone ETF FLEU – Up 34.4%

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This article originally published on Zacks Investment Research (zacks.com).

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