T. Rowe Price International Equity ETF

TOUS

Market cap $1.06B

If asked to pick a big story for markets in 2025 outside of A.I., it's hard to look past the consistent strength of international equities ETFs.

Active ETFs are gaining traction with investors as lower fee structures improve the odds that fund managers can outperform passive benchmarks, according to a recent Morningstar report.

Looking at emerging market investing options? Ex-U.S. equities — emerging markets included — have been robust performers for portfolios this year, providing a strong source of upside outside of AI-infused megacap tech stocks.

TOUS offers active management in developed markets, but its deviations from passive benchmarks are conservative and don't deliver significant alpha. Performance slightly outpaces EFA and VEA, but outperformance is inconsistent and not substantial enough to justify higher fees. Yield is lower and expenses are higher than major passive peers, making the cost-benefit of TOUS less attractive for most investors.

International equities have stood out in an uncertain 2025, providing diversification and a big boost to portfolios amid tariff uncertainty. That said, not all equities strategies are created equal.

2025 has been strong for international equities, and international ETF TOUS has proved no exception. The active international ETF has performed very well amid some notable domestic turbulence for U.S. investors.

The ETF wrapper provides a number of benefits for investors, combining tax-efficiency with cost savings. In more complex asset classes such as international equities, investors potentially compound the benefits of ETFs with those of active management.

Outside of the investing world, the terms “global” and “international” are generally used as synonyms for each other, describing the same fundamental premise. However, when investing, these terms convey two significantly different approaches to gaining overseas exposure.

The landscape of international equity ETFs often centers around benchmarks like the MSCI EAFE Index, which measures the performance of developed markets excluding the U.S. and Canada. While passive investing in such broad indexes is a common strategy, active international ETFs may be able to outperform benchmarks and add value to portfolios.

Don't hold your breath for dollar recovery odds this summer. After the worst first half for the U.S. dollar since Nixon's presidency, risk factors remain elevated in the near term.