ETF Edge: A fundamental shift in international investing as geopolitical concerns swing markets

• International ETF flows exceeded $216 billion in 2025, surpassing the combined flows of the previous two years, with active ETFs seeing a 59% increase.
• Tailwinds for global markets include a weaker US dollar, lower interest rates, pro-shareholder policies, and fiscal stimulus, encouraging diversification from US-centric portfolios.
• Opportunities are identified in Europe (deregulation, data centers), Emerging Markets (commodities, geopolitical shifts), and Asian tech supply chains (South Korea, Taiwan) benefiting from the global spread of AI innovation.
• The outlook for 2026 emphasizes bottom-up earnings growth in places like Japan due to corporate governance improvements and continued global defense spending.

The discussion highlights a significant shift towards international investing in 2026, driven by record ETF flows into global markets. Key factors include a weakening US dollar, lower global interest rates, and a broadening of the AI and tech trends beyond the US, leading to renewed interest in previously undervalued international equities.