Do international stocks outperform US stocks? (2024)

Do international stocks outperform US stocks?

Fidelity's Asset Allocation Research Team (AART) forecasts that international stocks will outperform US stocks over the next 20 years. Indeed, they expect even mature, developed markets such as Europe to outperform the US over that time.

Will international outperform US stocks?

Key Takeaways. U.S. stocks have outperformed global equities over the past 15 years, leading many investors to believe there is no good alternative. However, non-U.S. stocks may be attractive due to lower valuations, higher dividend yields and growth potential in select regions.

Is it worth it to invest in international stocks?

International stocks offer U.S. investors diversification, reducing reliance on domestic markets and potentially enhancing returns. Non-U.S. stocks can provide exposure to global economic growth, mitigate geopolitical risks and tap into industries not heavily represented domestically.

Will international stocks outperform in 2024?

In essence, the U.S. has not been as expensive as perceived, and the rest of the world has not been as cheap. That may be the case again in 2024. Therefore, a strategy that includes U.S. and international stocks may continue to outperform one that excludes U.S. equities, even though non-U.S. markets appear cheaper.

Have international stocks ever outperformed the S&P 500?

Despite lagging in recent years, when you look historically: in the last 50 years, international stocks outperformed U.S. stocks in over 40% of all 10-year rolling time periods.

Why are international stocks doing so poorly?

This has been influenced by the uncertain economic and political environment during the COVID-19 pandemic, where investors have paid a premium for the lower volatility and more stable, predictable returns offered by U.S. equities.

Why do US stocks outperform international?

One key reason the US equity market has performed so well relative to peers is that there are a disproportionate number of the world's most productive companies based in the United States. When we rank global companies based on returns on capital, US companies consistently stand out.

Is 20% international stocks enough?

Start by allocating 15% to 20% of your equity portfolio to foreign stocks. That's the percentage I typically maintain in the Vanguard portfolios. It's meaningful enough to make a difference in your overall returns, but not so much that it will ruin your portfolio when foreign markets temporarily fall out of favor.

How much of my portfolio should be international stocks?

Foreign large-growth and foreign large-value funds fill more specialized roles; we consider them “building blocks” that could make up as much as 15% to 40% of a portfolio's assets. Because of the higher risk inherent in emerging markets or region-specific funds, we recommend limiting them to 15% of assets or less.

How much should I have invested in international stocks?

Depending on your return objectives and risk tolerance, your international allocation should be 5-25% of your total stock market investments and the international weighting necessary for truly global exposure is likely to increase over time as global trends become even more entrenched.

Is now a good time to buy international stocks?

Think long term

2024 may be a good time to look for bargains in international stocks that have the long-term potential to deliver higher returns than US stocks. Fidelity's Asset Allocation Research Team (AART) forecasts that international stocks will outperform US stocks over the next 20 years.

What stock will boom in 2024?

What is the average global stock market return over 30 years?

Has Warren Buffett outperformed the S&P?

Even the Oracle of Omaha, widely considered one of the most successful investors, has not been able to outperform the booming S&P 500 in recent years. The stock of Warren Buffett's holding company Berkshire Hathaway has nearly equaled the return of the S&P 500 for the past two decades, according to MarketWatch.

Has Warren Buffett outperformed the S&P 500?

Since Buffett took control of Berkshire Hathaway in 1965, the stock has trounced the S&P 500. Its compound annual gain through 2023 was 19.8% versus 10.2% for the broader index. But Buffett says those days of market-trouncing returns are behind it.

How are international stocks performing?

Lastly, time frames also matter: the rebound in international performance began in October 2022, and on a rolling one-year timeframe, international developed markets have kept pace with the U.S., especially international value which has outperformed U.S. value by 2 percentage points (Exhibit 1).

Should I include international stocks in my portfolio?

The best way to ensure that you're participating in any market growth is to buy and hold and continue to stay invested – and this includes keeping a portion of your portfolio invested in foreign stocks.

Is 40% international stock too much?

However, to get the full diversification benefits, consider investing about 40% of your stock allocation in international stocks and about 30% of your bond allocation in international bonds. Indeed, Vanguard's fund of funds, such as target date funds, follow this target.

Are foreign stocks riskier than US stocks?

Myth 1: International investing is too risky.

Over the past 65 years, a globally balanced hypothetical portfolio of 70% U.S./30% international stocks has produced better risk-adjusted returns (Sharpe ratio)¹ and lower volatility (standard deviation) than an all-U.S. portfolio (see chart below, left).

Can US stocks continue to outperform?

US equities continued to outperform in 2023, with a 26% total return that exceeded non-US developed market equities at 19%, emerging markets at 10%, and Chinese equities, which lost 11%.

Is international diversification really beneficial?

Second, worldwide diversification allows the stock-bond ratio of a portfolio to be increased without raising the overall risk of the portfolio because returns between the broad US and International markets are not perfectly correlated.

Is VOO or VTI better?

However, if you know that you'd like a bit more exposure to smaller and medium-sized companies or just want to invest in more stocks overall, VTI is your best bet. VOO, meanwhile, is the better option for investors who want to focus heavily on large cap companies.

Does the S&P 500 have international exposure?

INTRODUCTION – THE S&P 500 HAS GLOBAL EXPOSURE

Composed of 500 companies that are domiciled in the U.S., the index captures approximately 82%1 of the total U.S. equity market value. An index of U.S. companies may lead one to initially assume that the index is exclusively dependent on the health of the U.S. economy.

Why doesn't everyone invest in the S&P 500?

Short-term volatility: while the S&P 500 historically provides strong annual returns over the long term, it's not immune to market volatility. Investors must be able to stomach short-term price swings and even sustained periods of market downturn like a bear market.

What is the 20 rule in stocks?

In other words, the Rule of 20 suggests that markets may be fairly valued when the sum of the P/E ratio and the inflation rate equals 20. The stock market is deemed to be undervalued when the sum is below 20 and overvalued when the sum is above 20.