Top Low-Cost International ETFs To Watch in 2026

Core Viewpoint - Domestic financial markets in 2025 experienced uneven performance, with volatility driven by foreign trade policy uncertainty and inflation concerns, leading investors to seek safer investment options [1] Group 1: Market Conditions - Some market sectors and asset classes saw reasonable gains, but volatility remained a constant factor due to uncertainty over foreign trade policies and inflation concerns [1] - Ongoing worries about a potential AI bubble are affecting investor sentiment, particularly among seasoned investors [1] Group 2: International Market Interest - Investors are increasingly looking at international markets, specifically international equities and low-cost ETFs, as a means to diversify away from the crowded and unpredictable U.S. market [2] - International markets, while influenced by U.S. stock performance, do not have a direct 1:1 relationship, providing built-in protection against risks associated with a concentrated U.S. market [2] Group 3: Concentration Risks in U.S. Markets - A few tech giants dominate the domestic markets, with the top 10 U.S. stocks accounting for over one-third of total market value, creating a top-heavy market that poses significant risks [3] - If leading stocks experience downturns, such as from an AI bubble burst, many investors could face substantial losses [3] Group 4: Global Market Valuation - International stocks represent about 75% of global GDP but only account for approximately half of the global stock market capitalization, indicating that the U.S. market is significantly overvalued [4] - The "home bias" among U.S.-based investors may become problematic, making the shift to international markets a prudent strategy to mitigate risk [4] Group 5: Recommended Investments - Analysts at Morningstar have identified seven international equity funds and ETFs that are rated as "buy," all being gold-rated Morningstar Medalists with low-cost primary share classes and at least $100 million in assets [5]