Core Viewpoint - International stocks are experiencing a resurgence, with ETFs like the iShares Core MSCI Total International Stock ETF (IXUS) outperforming the S&P 500, indicating a potential shift in investment focus for 2026 [1][2]. Group 1: Performance of International Stocks - In 2025, international stocks outperformed domestic stocks for the first time in a long period, with many ex-U.S. ETFs significantly beating the S&P 500 [1]. - The iShares Core MSCI Total International Stock ETF (IXUS) has increased by 7.5% year to date, while the S&P 500 has only gained 1.9% [1]. Group 2: Small Cap Stocks - The resurgence of international stocks includes smaller stocks, with the Avantis International Small Cap Value ETF (AVDV) being highlighted as a top choice for 2026 [2]. - The Avantis ETF has outperformed U.S. small-cap value indices over the past five years, indicating its effectiveness in the small-cap space [3]. Group 3: Fund Characteristics - The Avantis International Small Cap Value ETF is actively managed, which is advantageous in the less efficient small-cap market, particularly for international stocks that receive less attention from U.S. investors [4]. - The fund has a significant geographic allocation, with 32% of its portfolio in Japanese small caps, which are viewed as undervalued and potentially benefiting from Japan's economic policies [5]. - The Avantis ETF has a total asset size of $17 billion and an annual expense ratio of 0.36%, making it a cost-effective option for investors [6].

Core Insights - The article compares two small-cap value ETFs: Vanguard's VBR and State Street's SLYV, highlighting their differences in fees, performance, and sector allocations [4][5][6]. Fund Overview - SLYV tracks the S&P SmallCap 600 Value Index, holding over 460 companies with a focus on financials (23%), consumer discretionary (17%), and industrials (14%) [1]. - VBR tracks the CRSP US Small Cap Value Index, containing 840 stocks with a distribution across industrials (22%), financial services (20%), and consumer discretionary (14%) [2]. Performance and Fees - VBR has a lower expense ratio of 0.07% compared to SLYV's 0.15%, and has generated higher returns over the past year and five years [3][6]. - Both funds offer similar dividend yields, but VBR's overall performance is superior [3][5]. Market Capitalization - VBR's index includes companies with market caps ranging from $340 million to $31 billion, with a median of $4.0 billion [7]. - SLYV's index comprises companies with market caps from around $250 million to $11 billion, with a median of $1.9 billion [7]. Investment Considerations - VBR's broader diversification and higher median market cap may appeal to investors seeking stability and liquidity [8]. - SLYV may be suitable for those looking for a more concentrated ETF with exposure to smaller market cap companies, despite its higher fees [9].