Now Boarding: Single-Country ETFs
ETFs are taking investors abroad, no passport required.
Single-country ETFs are growing fast: The products have brought in over $26 billion this year, about four times the $6.5 billion they attracted in 2025, according to TD Securities’ US Weekly ETF report. This makes it one of the fastest-growing categories of equity ETFs, and this demand is driven by four main factors, according to the report: targeted AI exposure, improving fundamentals, diversification and more precise portfolio construction.
“Most of it is tied to investment themes versus the countries themselves,” said Cindy Zarker, client relationship manager at Fuse Research Network. In Japan’s case, for example, structural and governmental factors have played major roles, but themes like AI infrastructure and semiconductors appear to have influenced flows widely among other single-country ETFs, she said.
Don’t Put All Your Yen in One Basket
On an equity sector level, only healthcare and materials ETFs have seen comparable growth, with healthcare going from $1.7 billion in outflows in 2025 to $5.8 billion in inflows so far this year, and materials going from $1.8 billion in 2025 inflows to $8.3 billion in 2026, according to Bloomberg data. But while single-country ETFs can help provide diversification outside of US markets, they’re not necessarily a diversified bet on their own, Zarker cautioned. “If you’re investing for a specific theme because that country is doing a lot with chips or semiconductors, something like that, you do also have the other factors to do with the country and its own politics,” she said, pointing to the US’ ongoing trade war with Canada .
The countries leading this year’s flows are:
Japan ETFs have brought in $9.5 billion, driven by corporate governance reforms and its improving equity market. The iShares MSCI Japan ETF (EWJ) drew $4.3 billion of that.
South Korea is close behind, at $9 billion, driven by its increasing role in the AI supply chain. The iShares MSCI South Korea ETF (EWY) accounted for $7.7 billion of these flows.
Canada came in third, at $3.6 billion, followed by Taiwan, at $3.1 billion.
Packing Light: Joon Um, a CFP at Secure Tax & Accounting, has a significant number of Korean clients who are often interested in investing in the South Korean market. “Single-country ETFs can make sense when someone wants targeted exposure to a country they understand or believe has specific opportunities,” Um said. But he generally sees them as a smaller allocation. “The concentration and geopolitical risks can be much higher than with a broader international fund.”
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