After spending much of the past decade being pushed aside by the U.S. stock market, international stock markets are coming back, and investment experts say the opportunities should continue.
The 10-year period of severe underperformance will end at the end of 2024, and the momentum will continue into early 2026. While global allocations have remained low for most US-based investors for years due to weak returns, recent gains amid changing macro conditions and growing concerns about US market concentration are causing investors to reconsider the lack of international exposure in their portfolios.
Tim Seymour, chief investment officer at Seymour Asset Management and portfolio manager of the Amplify CWP International Enhanced Dividend Income ETF (IDVO), says the company isn’t just chasing recent strong performance. “This is not what people are saying…now is the time to trade in global markets,” he said on CNBC’s “ETF Edge” this week.
Over the past decade, global stocks outside the U.S. have significantly underperformed domestic markets, with the iShares MSCI ACWI ETF (ACWI), the leading global equity benchmark ETF, underperforming by about 60%, Seymour noted. This gap shaped investor behavior, with money flowing into U.S. stocks, especially mega-cap tech stocks. Seymour explained that the growth in U.S. market capitalization is a generational dynamic between investors that “prevents a lot of foreign investment.”
But now, he says, the structural underweight that many U.S. investors have in global markets is a tailwind. While international stocks account for about 30% to 40% of global market capitalization, Seymour estimates that U.S. investors’ exposure to foreign markets is 12% to 15% at the high end of the range, and often much less.
International stocks began outperforming U.S. stocks in November 2024, Seymour said, and have outperformed U.S. stocks by about 15% since then. While this doesn’t eliminate a decade of revenue lag, it does mark an important turning point. “For 14 months, foreign companies outperformed the U.S.,” Seymour said. Although the 10-year chart for the U.S. stock market still looks poor, “this is really the story of where global economic growth has rebounded,” he added.
A popular exchange-traded fund (ETF) chosen by many U.S. investors to gain international exposure is the iShares MSCI Emerging Markets ETF (EEM), which has $26.55 billion in assets and has returned 42% over the past year. The iShares MSCI ACWI ETF is up 20% over the past year, outperforming the S&P 500’s return by about 5%. Mr. Seymour said that although the potential returns from emerging markets are higher, investors looking to diversify overseas should place more emphasis on allocation to developed markets, citing a 70%-30% split as a reasonable example.
Part of the renewed interest in foreign markets is related to currencies. The weaker US dollar has improved returns for dollar-based investors with overseas assets. Meanwhile, metal prices have soared as investors seek stores of value, an investment development that Seymour described as a global trade, not just a U.S. phenomenon.
“All of this is creating tailwinds and a weaker dollar, but it’s also causing investors to diversify their entire portfolios, which have traditionally been US-centric,” John Meyer, chief ETF strategist at JPMorgan Asset Management, said on ETF Edge.
Seymour said the most important thing for investors to understand when considering adding international stocks to their portfolios is that fundamentals are improving. Earnings growth is emerging even in regions where the outlook was once stagnation. He said Japan is a key example, where years of corporate governance reform and shareholder focus are starting to boost profits.
Europe is also benefiting from lower interest rates, fiscal spending and regulatory changes. Seymour argued that Europe’s deregulation could be a more powerful catalyst than similar efforts in the United States because it represents a more radical change from the past. Banks, utilities, and industry are all seeing new momentum. He added that a decade of underperformance has made these stocks relatively cheap, and that many European bank stocks, such as Barclays, Santander and SocGen, benefit from central bank policy like their U.S. counterparts and should earn better dividends.
Meyer echoed this general view, stating that “developed international markets are certainly an area of interest for our customers.”
International markets also provide exposure to recent winning trades involving precious metals. Latin America is one of the best-performing regions this year, driven by gold and copper. Seymour said Chile and Peru are examples of international markets benefiting from increased demand for primary products. Meanwhile, Brazil has benefited from both the strength of its primary products and shifting political expectations.
“Brazil is the largest economy in Latin America,” Seymour said. “Some of it is the dynamics around commodities, but some of it is the dynamics around geopolitics.”
The $8.91 billion iShares MSCI Brazil ETF (EWZ) is up nearly 49% over the past year, while the iShares MSCI Peru and Global Exposure ETF (EPU) is up nearly 118% over the same period.
Trading in the dollar and metals came under pressure on Friday after President Trump announced he would nominate Kevin Warsh to replace Jerome Powell as Federal Reserve chairman, with markets believing that Warsh would be the one to maintain the Fed’s independence rather than force interest rate cuts at the president’s behest. Gold, silver, and platinum all crashed. But these metals have made huge gains over the past year, with gold up more than 90%, silver almost 200%, and platinum 120%.
Market strategists say the Trump administration’s global policies will continue to provide a long-term tailwind for international-themed deals. “The rest of the world is changing its position, whether it’s India and the EU breaking a trade deal or Canada breaking an oil deal with China,” Seymour said.
Technology leadership is another area where investors are reevaluating the balance between their U.S. and international holdings. Seymour highlighted South Korea as an example, noting that the country’s market is heavily weighted toward memory chip leaders like Samsung and SK Hynix, which account for about 46% of the Korean stock market benchmark tracked by the iShares MSCI Korea ETF (EWY), which is up 125% in the past year. “Memory is on fire,” he said, making country-level ETFs a viable way to gain exposure. Apple said in its earnings call Thursday that it doesn’t have enough chips to meet iPhone demand, another sign of solid memory trading.
Seymour noted that other companies such as ASML and Taiwan Semi, the world’s largest chip players, are also based outside the United States and have many data center deals overseas.
The renewed interest in international equities reflects a broader reallocation after years of neglect. Investors are responding to valuation gaps, earnings growth, and an increasingly multidirectional world of capital and trade. “These are global trades, not just U.S. trades,” Seymour said.
