2 International ETFs That are Crushing the SPY

The case for diversifying internationally was strengthened in 2025 after a number of non-U.S. stock markets outpaced the S&P 500 by a wide margin. Undoubtedly, the U.S. equity market, which has gotten heavier in the big tech names, has been seen as a place to do incredibly well, especially when compared to the global markets.

And while diversifying outside of the U.S. may still not be key to S&P-beating gains over the long run, I do think that it is worth considering what else is out there if you seek more diversification, lower price-to-earnings (P/E) multiples, or perhaps even stronger past-year share price momentum.

In any case, this piece will look at three international ETFs that have had their way with the S&P 500 in the past year. Whether the relative strength in 2025 leads to more of the same in 2026, though, remains the big question for U.S. investors. Either way, Goldman Sachs Research projects global stocks could be in for a nice 11% gain for the year ahead.

iShares MSCI South Korea ETF

We’re not even half of a month into 2026, yet the iShares MSCI South Korea ETF (NYSEARCA:EWY) is already up close to 8%, adding to the incredible gain it posted last year. In the past 12 months, shares of the South Korean ETF are up just shy of 104%.

With the South Korean market in breakout mode, thanks in part to Samsung (up 157% in the past year) and SK Hynix (up 286%), which comprise more than 45% of the ETF, perhaps investors seeking exposure to two of the hottest AI beneficiaries outside of the U.S. might wish to add the South Korean ETF to the watchlist.

Of course, the ETF is quite concentrated at the top, but given how tough it can be for many U.S. retail investors to expose themselves to the big South Korean firms, I do find the ETF to offer a lot for the 0.59% expense ratio. It’s tough to tell where the South Korean market goes from here, especially now that it’s an international momentum play.

What’s most striking is that the price-to-earnings (P/E) multiple of the ETF is still quite muted at 19.1 times, with a price-to-book (P/B) multiple of 1.91 times. Though I’d not be a chaser of the South Korean market, I do think any pullbacks through the year could offer opportunistic investors a great entry point. At the end of the day, Samsung and SK Hynix are great complements to the Mag Seven. And unless you can buy South Korean securities, the iShares MSCI South Korea ETF is a fantastic pick to add to one’s exposure.

iShares MSCI Japan ETF

Warren Buffett’s Berkshire Hathaway (NYSE:BRK-B) made some pretty sizeable bets in the Japanese trading companies in recent years. The big Japanese bets have already paid off in a big way. And while time will tell what Berkshire does with their Japanese positions under the leadership of its new CEO, Greg Abel, I still think that there’s no denying the relative value to be had with some of the Japanese names.

The iShares MSCI Japan ETF (NYSEARCA:EWJ) is outpacing the S&P 500 in the past year, up close to 31%. While the easy money has already been made, there’s no denying the relative value that still exists over in Japan. The iShares MSCI Japan ETF has an average P/E multiple of just 18.89 times.

With newfound momentum and broad exposure to many Japanese firms that Americans already know and love (think Toyota, Mitsubishi, and Sony), as well as the same Japanese trading companies in Berkshire’s public portfolio, I find the Japanese ETF to be very intriguing for investors looking for value outside of the S&P. With less momentum and lower valuations than the South Korean market, I like the Japanese market a bit more for 2026 for investors looking to diversify outside of the U.S. market.