These ETFs Provide Easy Exposure to Growing International Markets

With investors seeking to diversify away from potential U.S. market headwinds, several international ETFs focused on specific countries are highlighted as potential opportunities. The iShares MSCI Poland ETF (EPOL), iShares MSCI Austria Capped ETF (EWO), Global X MSCI Greece ETF (GREK), and iShares MSCI Brazil Small-Cap ETF (EWZS) have delivered YTD returns ranging from approximately 34% to 44%, driven by strong performance in their respective markets, particularly in the financial sector; however, investors should note the concentrated nature and sector biases of these ETFs.

Analysis

Amidst U.S. market concerns, underscored by Moody's mid-May credit rating downgrade and potential tariff increases, investors are increasingly exploring international diversification opportunities. Exchange-Traded Funds (ETFs) provide accessible routes to global markets, with several country-specific funds demonstrating notable performance. The iShares MSCI Poland ETF (EPOL) has capitalized on Poland's burgeoning industry, evidenced by a 1.2% year-over-year increase in industrial production in April against predicted declines, delivering over 44% year-to-date (YTD) returns in 2025 despite a concentrated portfolio of 33 holdings and significant (46%) financial sector exposure, with an expense ratio of 0.60%. Similarly, the iShares MSCI Austria Capped ETF (EWO) focuses on Austrian equities, achieving nearly 36% YTD returns, largely driven by its major bank holdings like Erste Group and BAWAG, which constitute over a third of its approximately 20-position portfolio where financials represent nearly half; its expense ratio is 0.50%. The Global X MSCI Greece ETF (GREK), the sole U.S. ETF for Greek stocks, has leveraged Greece's economic recovery to post almost 40% YTD returns, though it also features a narrow basket of 31 names with financials accounting for 51% of the portfolio, and an expense ratio of 0.57%. In contrast, the iShares MSCI Brazil Small-Cap ETF (EWZS) targets Brazilian small-cap equities, offering greater diversification with over 70 positions and its largest holding under 6%; it has significant exposure to consumer discretionary and financials (over a third combined) and has achieved YTD returns of almost 34% with an expense ratio of 0.60%. While these ETFs present compelling returns, their narrow focus and, for most, heavy concentration in the financial sector are critical considerations for investors.

Key Decisions for Investors

• Investors seeking to mitigate U.S. market specific risks may consider allocating to these highlighted international ETFs, but should be cognizant of their high concentration in specific countries and, for EPOL, EWO, and GREK, a significant bias towards the financial sector.
• Evaluate the substantial year-to-date returns (ranging from approximately 34% to over 44%) against the inherent risks of limited holdings and sector concentration, particularly in financials for the European ETFs, and assess if the greater diversification and small-cap focus of EWZS better aligns with individual risk profiles.
• Conduct due diligence on the specific economic conditions and growth drivers within Poland, Austria, Greece, and Brazil, and consider whether the observed outperformance, especially in the financial sector, is sustainable before committing capital, noting the expense ratios (0.50%-0.60%) are typical for specialized international funds.