Here's a question worth asking: when was the last time diversification felt this good? For investors who spread their bets beyond U.S. borders in 2025, the answer is probably "right now." While the S&P 500 delivered a respectable 15% gain this year, that pales next to Spain's 40% surge or South Korea's eye-popping 65% rally.
Even Canada, which spent much of the year dealing with tariff threats from its largest trading partner, managed to double the S&P 500's performance. Not bad for a market that was supposedly on the defensive.
The momentum appears far from exhausted as we head into 2026. Multiple factors are aligning to support international equities, from currency movements to nearshoring trends to regional policy shifts. But here's the catch: buying individual foreign stocks directly tends to be complicated and expensive. That's where ETFs come in, offering broad exposure without the hassle.
Let's walk through five international ETFs positioned to capture the opportunities ahead.
Franklin FTSE South Korea ETF
South Korea claimed the crown for best-performing major stock market in 2025, and it wasn't particularly close. The KOSPI Composite Index rocketed more than 65% year-to-date, leaving U.S., European, and Chinese markets in the dust.
Several factors converged to fuel this rally. First, South Korea largely escaped the Trump administration's aggressive tariff policies. Second, domestic economic stimulus measures actually worked, reigniting growth. Third, the country's tech-heavy market caught a powerful tailwind from the artificial intelligence boom. When you've got companies like Samsung Electronics and SK Hynix in your corner during an AI gold rush, good things tend to happen.
The Franklin FTSE South Korea ETF (FLKR) offers a clean way to capture this market's strength. The fund concentrates heavily on those two semiconductor powerhouses, with Samsung Electronics commanding 19% of assets and SK Hynix accounting for 17%. But the ETF also holds 155 total equities, including familiar names like Hyundai, Kia, and KB Financial Group.
What makes FLKR particularly attractive is its bargain pricing. With a 0.09% expense ratio, it costs a fraction of comparable funds while delivering similar exposure. The iShares MSCI South Korea ETF might be bigger and more liquid, but why pay more for essentially the same holdings?
iShares MSCI Spain ETF
Europe's markets enjoyed a strong 2025, powered by increased government spending across the EU and a declining dollar that made European assets more attractive. Leading the charge was Spain, where the IBEX 35 index climbed more than 40% year-to-date.
Spain's outperformance wasn't an accident. The country's banking sector boomed while economic growth significantly outpaced its European peers. Tourism, one of Spain's economic pillars, remained robust. The numbers tell the story: Spain's GDP expanded 3% in 2025, nearly triple the overall EU growth rate.
Banking giants Santander and BBVA drove much of the market's gains, and both feature prominently in the iShares MSCI Spain ETF (EWP). The fund allocates more than 40% of its holdings to Spain's finance sector, which proved to be exactly the right bet this year.
EWP charges a 0.50% expense ratio, which isn't cheap but falls within reasonable range for a single-country international fund. With $1.6 billion in assets under management, the fund offers solid liquidity. The technical picture looks encouraging too, with the price holding support at the 50-day moving average and a bullish MACD crossover signaling continued momentum.
Franklin FTSE Latin America ETF
Jeremy Grantham must be smiling. After years of calling for emerging market outperformance, his thesis is finally playing out. Latin American markets have been particularly hot, though not for the reasons you might expect. This isn't about AI or banking. Instead, the rally stems from dollar weakness and the nearshoring phenomenon that's redirecting manufacturing capacity away from Asia and into the Americas.
The Franklin FTSE Latin America ETF (FLLA) provides broad regional exposure at an attractive price. Despite holding just $45 million in assets, the fund charges only a 0.19% expense ratio. That's impressive for an emerging markets fund, where trading costs and wide spreads typically drive up expenses.
FLLA holds 133 stocks, including heavyweights like Vale S.A. and Petróleo Brasileiro S.A. Brazil dominates the portfolio at over 55%, followed by Mexican equities at 30% and Chilean stocks at 9%. Sector-wise, finance leads the way, trailed by minerals, utilities, and energy.
The trade-off for that low expense ratio is limited liquidity, so this fund works best for patient investors making long-term allocations. The chart reflects the inherent volatility of emerging markets, showing more choppiness than developed market ETFs. But the underlying uptrend looks solid, with support holding at the 50-day moving average and the RSI staying well below overbought territory.
Vanguard FTSE Europe ETF
European economies might present a mixed picture, but European stock markets are telling a much clearer story. The region has emerged as a hot destination for investor capital, benefiting from friendlier policies and dollar weakness.
The Vanguard FTSE Europe ETF (VGK) celebrated its 20th anniversary with one of its best years ever, gaining nearly 35% year-to-date. That performance came despite the ongoing war in Ukraine and occasional hostile rhetoric from Washington. The resilience is remarkable.
VGK offers exposure to European blue chips at a microscopic 0.06% expense ratio, one of the lowest you'll find anywhere in international investing. The fund holds more than 1,200 stocks, with top holdings including LVMH, Rheinmetall, SAP, ASML, and Novo Nordisk. Even the largest position, ASML, accounts for just 2.85% of assets. This is diversification in its purest form.
The fund briefly dipped below its 50-day moving average in November, shaking out some nervous holders. But European equities quickly rallied to fresh 2025 highs, and a bullish MACD crossover reignited momentum heading into year-end. With more than $28 billion in assets under management, VGK combines scale, low costs, and strong technical positioning.
iShares MSCI Canada Index Fund ETF
Oh Canada, indeed. Despite enduring near-constant criticism from the Trump administration, Canadian stocks absolutely crushed it in 2025. Major indices climbed more than 30%, roughly doubling the S&P 500's performance.
Trade tensions dominated headlines early in the year, raising concerns about tariff impacts on Canada's export-heavy economy. But as tariff implementation focused primarily on specific sectors like autos rather than broad-based restrictions, Canadian stocks took off. The rally proved particularly strong in the banking sector, which has delivered both capital appreciation and steady dividends.
The iShares MSCI Canada Index Fund (EWC) rode this wave to a nearly 35% gain in 2025. The fund's concentration in megacap banks turned out to be perfectly positioned for the market environment.
EWC holds just 84 stocks, and the top 10 positions account for more than 43% of assets. Royal Bank of Canada, TD Bank, and Bank of Montreal represent some of the largest holdings, but the fund also includes diversification across industries with names like Shopify, Barrick Mining, and Enbridge Inc.
The expense ratio sits at 0.50%, matching the Spain ETF and falling within reasonable bounds for country-specific international exposure. With more than $3.7 billion in assets under management, EWC offers plenty of liquidity for investors looking to add Canadian exposure heading into 2026.
