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Diversify Into Discounts: International ETF TOUS Rises

BY | ETF Database
5:23 am ET 11/13/26 | 12 VIEWS
Don’t look now, but there is a brewing case to diversify abroad. Investors have been aware of the concentration risk in the S&P 500 for some time. What’s more, while AI has driven massive growth, volatility and longer-term bubble concerns linger. International ETFs like the T. Rowe Price International Equity ETF (TOUS A-) offer the opportunity to diversify into significant valuation opportunities to compensate via an actively managed ETF.Key Takeaways: U.S. stock valuations are quite high, with the S&P 500’s forward p/e ratio above average at around 19. That valuation risk is also compounded by concentration risk from those very expensive tech names. International stocks are much cheaper by contrast and can help diversify portfolios. Even with the Nvidia’s recent price decline, the S&P 500 right now is trading at a significantly elevated forward price-to-earnings ratio. At around 22x, that above-average richness owes much to the AI hyperscalers. That small cadre of names make up almost 40% of the S&P 500’s market cap — making potential risks to their performance a concern for many. Diversification abroad doesn’t just help mitigate that risk; it also opens up new opportunities. The right fund can potentially identify upside in those undervalued names and segments. That’s where TOUS’s active international ETF approach has a role to play and an opportunity to perform. TOUS charges a competitive 50 basis point fee for an actively managed approach to international stocks. The ETF invests in stocks across the cap spectrum with attractive pricing and high growth potential. Holding around 150 or so names, it targets developed market firms with high earnings potential and quality models. That fundamental, bottom-up approach leans on the firm’s global research platform, outperforming its benchmark in multiple periods. The strategy’s active remit has helped it return 16.3% over the last 12 months per T. Rowe Price data. That has outperformed the fund’s benchmark, the MSCI EAFE Index, in that time. TOUS has also outperformed that index since its June 2023 launch, as well. See more: T. Rowe Price Launches Active Emerging Markets Bond ETF Looking ahead, the fund has a case to stand out in the international ETF landscape. For those wanting to add international equities exposure and diversification, the fund can appeal as a long-term pillar in that allocation. For more news, information, and analysis, visit our Active ETF Content Hub.

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