The Best-Performing International ETFs of the Year

Among U.S.-listed ETFs with an international focus, no ETF has performed better than the Direxion Daily FTSE China Bull 3X Shares (YINN). The triple-leveraged ETF is up 73% in the year-to-date period through Dec. 9, just ahead of the 72% gain for the ProShares UltraShort MSCI Brazil Capped ETF (BZQ).

YINN has benefited from the torrid rally in Chinese stocks that began in September, after Chinese authorities unveiled plans to support the Chinese economy with monetary and fiscal stimulus. 

While short on details, the promise of government support for the struggling Chinese economy was enough to ignite a rally in one of the worst-performing stock markets of the past decade. 

In addition to YINN, China ETFs like the iShares China Large-Cap ETF (FXI) and the VanEck ChiNext ETF (CNXT) have also surged this year, with FXI gaining 39% and CNXT returning 32%.

Brazilian Stocks Sink Compared to China

In contrast to the stellar performance of China, the Brazilian stock market has been hit hard this year. The aforementioned BZQ, which is an inverse Brazil ETF, is the second-best-performing international-focused ETF of the year.

Analysts attribute the poor performance of Brazil's stock market to rising government deficits, which is fueling higher inflation and interest rates, “[sucking] oxygen out of the room for investments into risk,” explained Nikolaj Lippmann, a strategist at Morgan Stanley. 

Meanwhile, the stock market in neighboring Argentina is going the other way.

The Global X MSCI Argentina ETF (ARGT) is the third-best-performing international ETF of the year, with a 64% return.

The macro outlook for Argentina is the opposite of that of Brazil.

“[President Javier Gerardo Milei] hasn’t just talked the talk, but is actually walking the walk,” Malcolm Dorson, senior portfolio manager at Global X Management, said. “He has trade balances, he has built a fiscal surplus, inflation is ticking down, and economic activity is picking up.”

In addition to China and Argentina, ETFs tied to Israel and Peru have done well this year. The iShares MSCI Israel ETF (EIS) and the iShares MSCI Peru and Global Exposure ETF (EPU) were up 35% and 31%, respectively, in the year-to-date period through Dec. 9.