8 International Stock ETFs Outpacing the S&P 500 in 2025

International stock ETFs are rolling this year, delivering returns that far outpace their U.S. counterparts. While the SPDR S&P 500 ETF Trust (SPY) is down 3% year to date in 2025, the Vanguard Total International Stock ETF (VXUS) is up 9%, highlighting the strength of global markets relative to those in the United States.

Europe Leads the Way

Europe exchange-traded funds, in particular, are the standout performers, benefiting from expectations of fiscal stimulus and rising defense spending. The Vanguard FTSE Europe ETF (VGK) has climbed 15% so far this year.

Outside of broad international ETFs, some country- and sector-specific funds have surged even more. 

Among U.S.-listed exchange-traded funds, the top-performing non-leveraged, non-inverse ETF of the year is the Select STOXX Europe Aerospace & Defense ETF (EUAD), which has soared 46%. 

The fund, which tracks major European aerospace and defense firms like Airbus, Safran and Rolls-Royce, has benefited from Europe’s push to strengthen its military amid geopolitical tensions and uncertainty over U.S. support for NATO.

Another big winner is the iShares MSCI Poland ETF (EPOL)—up 39%— which has benefited from robust GDP growth and a bright economic outlook. GDP in the country has grown at nearly 4% in recent quarters, making Poland one of the fastest-growing economies in Europe.

The Polish government has promised to make tens of billions of euros worth of investments in transportation and energy in the coming years. The country is expected to begin construction of its first nuclear power plant in 2026. 

China ETFs Defy Trump Tariffs

In Asia, China-focused ETFs have posted surprisingly strong gains, even as President Donald Trump has levied new tariffs on Chinese imports.

The KraneShares Hang Seng TECH Index ETF (KTEC) and the Roundhill China Dragons ETF (DRAG) have both surged around 37% and 39% year to date, respectively, shrugging off trade war concerns as investors bet on China’s tech recovery and stimulus measures. 

Germany ETFs Surge as Country Takes Economic Lead

Another big winner is the First Trust Germany AlphaDEX Fund (FGM), which has climbed 29% as Germany takes the lead in the EU’s push for fiscal expansion and military buildup. 

The likely next German government has proposed a €500 billion infrastructure and defense investment plan, which has fueled investor optimism for growth in Europe’s largest economy.

Global Defense ETFs Continue to Shine

Finally, the Global X Defense Tech ETF (SHLD) is another top performer with a 29% gain, riding the wave of record-high global defense spending. 

SHLD is classified as a global ETF rather than an international ETF since it owns U.S. stocks. But it's worth mentioning given investors' heightened focus on defense stocks this year.

With European nations ramping up military budgets and the U.S. continuing to invest heavily in defense technology, SHLD has been a strong play on arguably the hottest theme of the year so far. 

The ETF tracks a modified market-cap weighted index of the top 50 pure-play defense technology companies from around the world. Currently, about 60% of the portfolio consists of U.S. stocks, while the rest is in international stocks.