For the better part of a decade, owning anything other than U.S. stocks felt like leaving money on the table. The S&P 500, powered by Big Tech and the Magnificent Seven, just kept winning. But 2026 is starting to tell a different story.
International ETFs are staging a comeback. Global ETF assets under management hit a record $21.91 trillion at the end of April, according to data from ETFGI, topping the previous high of $21.24 trillion set in February. Developed markets outside the U.S. gained 9.44% in April and are up 9.63% year-to-date, roughly matching—and in some cases beating—the S&P 500's near-9% gain this year. Emerging markets climbed 10.53% in April and are up 7.39% so far in 2026.
That steady performance is reigniting interest in international and emerging-market ETFs after a decade in which U.S.-focused funds dominated investor flows.
Korea and Taiwan ETFs Lead the Rally
Among developed markets, South Korea posted one of the strongest gains globally in April, with year-to-date returns of more than 38%. Taiwan, meanwhile, continues to ride semiconductor- and AI-related momentum, with stocks up more than 26% YTD.
That's been a boon for emerging-market ETFs with heavy exposure to Asian tech and chip manufacturing. The iShares MSCI South Korea ETF (EWY) has returned more than 79% so far this year. The iShares MSCI Taiwan ETF (EWT) has gained around 45% YTD. Semiconductor-focused funds are also on fire: the iShares Semiconductor ETF (SOXX) is up more than 65% YTD, and the VanEck Semiconductor ETF (SMH) has gained nearly 55%.
Taiwan Semiconductor Manufacturing Co. (TSM) remains a dominant holding across several global semiconductor ETFs, while Korean equities have benefited from renewed foreign inflows into memory-chip and AI infrastructure plays.
Investors are also rotating toward broader international equity funds. The Vanguard Tax-Managed FTSE Developed Markets ETF (VEA) has pulled in almost $8 billion in inflows this year, per ETFDb. The iShares Core MSCI EAFE ETF (IEFA) and the Vanguard Total International Stock Index Fund ETF (VXUS) have also enjoyed strong interest, with YTD inflows of over $7 billion and $14 billion, respectively.
Valuation Gap Is Driving Diversification
One major catalyst behind the renewed interest in international ETFs is valuation. After years of U.S. outperformance, many international markets still trade at substantial discounts to American equities, particularly compared with high-priced AI and mega-cap tech stocks. That valuation gap is becoming increasingly attractive as investors search for diversification beyond the concentrated U.S. tech trade.
The rotation also comes as the dollar has softened from recent highs, global central banks begin diverging from the Federal Reserve, and international markets benefit from improving industrial and manufacturing activity.
General emerging-market ETFs are seeing renewed interest too, particularly Asia-focused funds. The Vanguard Emerging Markets Stock Index Fund ETF (VWO) has seen more than $4 billion in inflows this year, while the iShares MSCI Emerging Markets ETF (EEM) has pulled in more than $3 billion.
America-Only Trades Start to Fade
For much of the past decade, investors had little incentive to look outside U.S. equities. The S&P 500 consistently outperformed global peers. But 2026's market dynamics are beginning to shift that narrative.
U.S. AI leaders continue driving gains, but investors increasingly appear willing to complement domestic exposure with international ETFs tied to semiconductors, industrial recovery, and cheaper valuations abroad. The trend could become even more pronounced if Treasury yields remain elevated, the dollar weakens further, or global growth broadens beyond the U.S. technology sector.
