Smaller Foreign ETFs Beating The Big Boys

August 10, 2017

International equity ETFs listed in the U.S. have already attracted $104 billion in fresh net assets so far this year. That makes it the most popular asset class with U.S. investors looking to foreign equities for outsized gains relative to the U.S. stock market.

And for the most part, and deliver outperformance is what they’ve done.

Among the investor favorite picks year-to-date are developed-market ex-U.S. giants like the iShares Core MSCI EAFE ETF (IEFA), which has attracted more than $14 billion in fresh net assets this so far year. Its counterpart, the iShares MSCI EAFE ETF (EFA), has seen inflows of nearly $10 billion. The Vanguard FTSE Developed Markets ETF (VEA) has net inflows for 2017 so far of more than $11 billion.

Emerging Markets Popular Too

In the emerging market ETF space, the iShares Core MSCI Emerging Markets ETF (IEMG) has seen net creations so far in 2017 of nearly $12 billion, and the Vanguard FTSE Emerging Markets ETF (VWO) has gathered more than $6.5 billion.

All of these ETFs have outrun funds like the SPDR S&P 500 (SPY) and the iShares Russell 1000 ETF (IWB) notably year-to-date. In the race between developed-market ex-U.S. versus U.S. large-cap stocks, international equities are ahead by at least 5%, as measured by these funds: 

 

 

Between emerging markets and U.S. equities, the outperformance is even more pronounced, with emerging market equity ETFs up almost twice as much as U.S. stock funds: 

 

 

 

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