Vanguard FTSE Developed Markets ETF

VEA

Market cap $219B

Since President Donald Trump rolled out his landmark “Liberation Day” tariffs on April 2 last year, U.S.

The U.S. stock market has underperformed many international stock markets year to date, due in part to concerns about how tariffs will affect the U.S. economy. The Vanguard FTSE Pacific ETF provides heavy exposure to stocks in Japan, South Korea, and Australia; the fund has advanced 18% year to date.

Almost 1,000 active ETFs launched in 2025, but did their performance substantiate the demand? Across the universe of funds, active managers for ETFs and mutual funds found that outperformance was elusive compared to their passive peers based on the latest Morningstar US Active/Passive Barometer report.

Both VEA and SPDW offer ultra-low expense ratios and similar one-year returns. VEA holds a much larger number of stocks and manages significantly more assets under management (AUM).

Roxanna Islam, head of sector and industry research at VettaFi, joined Nate Geraci on this week's ETF Prime to discuss record international equity flows. The category saw net inflows of over $220 billion in 2025 with momentum continuing into 2026 at roughly $75 billion year-to-date.

Advanced economy and emerging market stocks outperformed U.S. stocks last year. That momentum continues as those stocks are crushing U.S. stocks so far in 2026.

Both developed and emerging market international stocks have beaten the S&P 500 by a wide margin over the past year. Their relative value and accelerating growth profiles look attractive even after their recent rally.

International stocks have been driven by a weaker dollar and positive global economic conditions. European stocks in particular are benefiting from increased defense spending.

There's no stopping the momentum in the ETF market. January 2026 brought a record $166 billion in net inflows, surpassing the last three Januarys combined.

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