It’s been a good year for international equity ETFs. As a category, broad exposure funds tapping into both developed and emerging market equities have delivered outsized gains relative to U.S. markets this year, as well as much sought portfolio diversification.
Consider two popular ETF examples. The iShares Core MSCI Emerging Markets ETF (IEMG) and the Vanguard FTSE Europe ETF (VGK) have both outpaced the SPDR S&P 500 (SPY) in 2025. One of them has delivered more than twice the results of SPY, as seen in table below.
Source: VettaFi PRO
Investors have taken notice. IEMG has picked up more than $11.4 billion in fresh net assets this year. Meanwhile, VGK has seen $6.2 billion in net inflows. Other broad-based international equity ETFs benefiting from this momentum include:
What’s been interesting to note, however, is that appetite for international equity exposure and diversification has largely stayed top level. It hasn’t spilled much into single country opportunities. Case in point: China.
Broad-based China ETFs out of Favor
China has made a lot of headlines this year. From trade and tariff disputes with the U.S. to concerns about economic momentum to uncertainty as a new Five Year Plan takes shape for 2026, China has been at the center of a lot of noise.
And yet, China equities have been delivering strong results, outpacing U.S. markets notably in 2025.
According to Jeff Weniger, head of equity strategy at WisdomTree, China has been standing out all year, but no one seems to really care. In fact, he calls China an “amazing contrarian” opportunity for investors ready to buck the noise. WisdomTree is behind the WisdomTree China ex-State Owned Enterprises Fund (CXSE).
“China [CXSE] is one of the best performing funds we have this year. It’s most people’s best performing fund this year and the grand total sum of interest I’m seeing from advisors is zero,” Weniger said in a recent webcast conversation. “I’ve never seen such a thing where you reach Halloween, and your best performing fund has no interest at all.”
“China has been going up on account of the ‘TINA’ trade, where you have a 5-Year Sovereign at 1.62% or you can own tech stocks, and people have gone for the tech stocks.”
CXSE is up more than 40% in 2025. That’s about 10 percentage points higher than the results seen in the iShares China Large-Cap ETF (FXI) — a popular proxy for the category — itself up more than 30%.
Demand has been nowhere to be found. In fact, investors have pulled money from CXSE this year. FXI has bled more than $2 billion in net redemptions. Another popular China ETF, the mainland-China-focused Xtrackers Harvest CSI 300 China A-Shares ETF (ASHR), too, has seen $1.4 billion in net outflows.
Source: VettaFi PRO
China Tech? Yes, Please
One of the exceptions to this shunning of China-focused ETFs is the tech space. China tech ETFs have been capturing fresh attention, riding the appetite for all things tech we continue to see globally.
Funds like the KraneShares CSI China Internet ETF (KWEB), which is up 36% this year, has taken in $2.2 billion in net inflows. The Invesco China Technology ETF (CQQQ), up 44% year-to-date, has picked up $2 billion. These ETFs offer access to some of the most popular China tech stocks like Tencent, Meituan, Alibaba, Baidu and JD.com, among others.
As we navigate the fourth quarter and revisit portfolio allocations for a new calendar year, winners and losers will come into sharp focus. Calls for continued focus on the international equity opportunity remain loud, but China ETFs sit at an interesting place, delivering solid gains to very little investor fanfare. It will be interesting to see what happens next.
For a replay of WisdomTree’s webcast “Unlocking Opportunities in the U.S. and Beyond” Weniger’s comments, check out this link.
This article was prepared as part of WisdomTree’s general paid sponsorship of VettaFi | ETF Trends. This specific content within and any opinions expressed therein belong solely to VettaFi and do not reflect the opinion or analysis of WisdomTree, its employees, or its affiliates. Content published on VettaFi | ETF Trends is provided for educational purposes only and should not be considered investment or tax advice. For investment or tax advice, please consult a financial professional.
WisdomTree is an independent company, unaffiliated with VettaFi | ETF Trends. WisdomTree has not been involved with the preparation of the content supplied by VettaFi | ETF Trends. It does not guarantee, or assume any responsibility for its content.
Originally published on ETF Trends
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