After spending most of the past decade being trounced by the U.S. stock market, international equities are back and investing experts say the opportunity should last.
A brutal stretch of underperformance that lasted a decade ended in late 2024 and has sustained its momentum at the outset of 2026. After years of global allocations staying low for most U.S.-based investors because of the weak returns, the recent gains amid shifting macro conditions and growing concerns about U.S. market concentration are leading investors to take another look at the lack of international exposure in their portfolios.
It is not merely chasing hot recent performance, according to Tim Seymour, Seymour Asset Management chief investment officer, who is also a portfolio manager on the Amplify CWP International Enhanced Dividend Income ETF (IDVO). "This is not people saying ... this is a time to trade global markets," he said on this week's CNBC's "ETF Edge."
Over the last ten years, global equities outside of the U.S. underperformed domestic markets by a wide margin, with Seymour noting that a major world equities benchmark ETF, the iShares MSCI ACWI ETF (ACWI), underperformed by about 60%. That gap shaped investor behavior and capital flowed into U.S. equities, particularly mega-cap technology stocks. Seymour described it as a generational dynamic among investors in which market capitalization growth in the U.S. "choked off a lot of international investing."
But he says now the structural underweight that many U.S. investors have to global markets is a tailwind. While international equities represent roughly 30-40% of global market capitalization, Seymour estimates that at the high-end of the range, U.S. investor exposure to overseas markets is 12-15%, and in many cases much lower.
International equities began to outperform the U.S. in November 2024, and since that turn have beaten U.S. equities by roughly 15%, Seymour said. While that does not erase the decade of lagging returns, it marks a meaningful inflection point. "In a 14-month span, you've seen international outperform the U.S." Seymour said. While the ten-year chart versus the U.S. stock market still looks poor, "it really is a story of where global growth has picked back up," he added.
A popular exchange-traded fund choice among 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, besting the S&P 500's return by about 5%. Seymour said while the potential returns from emerging markets are higher, investors who are looking to diversify overseas should tilt more heavily to developed market allocations, citing a 70%-30% split as a reasonable example.
Part of the renewed interest in overseas markets is tied to currency. A weakening U.S. dollar has improved returns for dollar-based investors holding foreign assets. Meanwhile, metals have surged as investors look for stores of value, an investing development that Seymour described it as a global trade rather than a U.S. only phenomenon.
"These are all providing tailwinds and a weakening dollar, of course, where this is leading investors to diversify their overall portfolios that had been previously U.S.-centric portfolios," Jon Maier, J.P Morgan Asset Management chief ETF strategist, said on "ETF Edge."
Seymour said the most important point for investors to understand when considering the additional of international stocks to a portfolio is that the fundamentals are improving. Earnings growth is appearing in places where stagnation once defined the outlook. Japan is a key example, he said, where years of corporate governance reform and shareholder focus is starting to boost returns.
Europe is also benefitting from lower interest rates, fiscal spending, and regulatory change. Seymour argued that deregulation in Europe may be a more powerful catalyst than similar efforts in the U.S. because it represents a sharper shift from the past. Banking, utilities, and industrials have all seen renewed momentum. He added that in additional to a decade of underperformance making these stocks cheap on a relative basis, many European banking stocks will benefit as much from central bank policy as U.S. banks and are better dividend plays, such as Barclays, Santander and SocGen.
Maier echoed this general view, saying that "developed international markets are certainly areas of interest to our clients."
International markets also offer exposure to recent winning trades, including precious metals. Latin America has been one of the strongest performing regions this year, driven by gold and copper. Seymour said Chile and Peru are examples of international markets benefitting from rising commodity demand. Meanwhile, Brazil has gained on both commodity strength and shifting political expectations.
"Brazil's the largest economy in Latin America," Seymour said. "Some of this are the dynamics around commodities, but some of these are the dynamics around the geopolitics."
The iShares MSCI Brazil ETF (EWZ), which has $8.91 billion in assets, is up almost 49% over the past year, while the iShares MSCI Peru and Global Exposure ETF (EPU) is up almost 118% during the same time period.
The dollar and metals trades came under pressure on Friday after President Trump announced Kevin Warsh as his pick to succeed Jerome Powell as Fed Chair, with market belief in Warsh as figure who will maintain Fed independence rather than force rates down at the president's bidding. Gold, silver and platinum all crashed. However, these metals have seen enormous returns over the past year, with gold up over 90%, silver up roughly 200%, and platinum up 120%.
Market strategists say Trump administration global policies will continue to serve as longer-term tailwinds for international-themed trades. "Whether it is India and the EU cutting a trade deal or Canada cutting oil deals with China, the rest of the world is repositioning," Seymour said.
Technology leadership is another trade where investors are reassessing the balance between U.S. and overseas holdings. Seymour highlighted South Korea as example, noting the country's market is heavily weighted toward memory chip leaders like Samsung and SK Hynix, which make up around 46% of the South Korean stock market benchmark tracked by the iShares MSCI South Korea ETF (EWY), which is up 125% over the past year. "Memory has been on fire," he said, making country level ETFs a practical way to gain exposure. Apple said on its earnings call on Thursday it can't secure enough chips for iPhone demand, another sign supporting the strength of the memory trade.
Seymour noted other companies that are among the biggest chip players in the world, ASML and Taiwan Semi, also reside outside U.S., and there are many data center plays overseas as well.
The renewed interest in international equities reflects broader reallocation after years of neglect. Investors are responding to valuation gaps, earnings growth, and a world where capital and trade are increasingly multi directional. "These are global trades, not just U.S. trades," Seymour said.
