In 2025, U.S. markets were volatile due to uncertainty over foreign trade policies and inflation fears, exacerbated by concerns of an AI bubble. Many domestic investors are turning to international markets, such as low-cost exchange-traded funds (ETFs), to diversify and mitigate risks associated with concentrated U.S. tech stocks.

Top U.S. tech giants like Nvidia, Apple, and Microsoft dominate the market, accounting for over one-third of total market value. This concentration poses significant risk, especially if these stocks decline. Investors are increasingly looking towards international markets to reduce exposure to this risk and capitalize on global opportunities.

Morningstar analysts recommend seven international equity funds and ETFs as strong buys, with low costs and substantial assets. These include Fidelity Total International Index Fund, iShares Core MSCI Total International Stock ETF, and American Funds New Perspective Fund, among others, showing positive YTD performance and offering further diversification options.

Investing in overseas stocks isn’t just about chasing higher returns; it’s also about protecting your portfolio from concentrated risk in the U.S. market. By allocating a portion of your investments to low-cost international ETFs, you can create a more resilient portfolio capable of withstanding domestic downturns and potentially realizing significant gains in a diverse and developing international market.

Read more at Yahoo Finance: Top Low-Cost International ETFs To Watch in 2026