By Randy Farina, Senior Portfolio Manager
Many international indices have significantly lagged behind their U.S. counterparts in recent years. From 2009-2019, the S&P 500 Index gained 256% while the MSCI EAFE Index only returned around 81% for the decade.1 The coronavirus pandemic has led to further underperformance for international markets as U.S. large-cap indices have been able to lean on their strong balance sheets since the outbreak began.2
With this in mind, investors could be left wondering if international stocks are still worth exploring and implementing in their portfolios. Below, we examine four key benefits of international investing.
Though U.S. investors focused on domestic stocks have fared well over the last decade, it’s important to be cognizant of home country bias when investing. We generally recommend around a 20-30% allocation to international investments due to the aforementioned reasons.
As we enter the new year, we’ll be closely watching non-domestic markets and will continue to seek out quality, attractively valued international names. If you have any questions, please contact me at email@example.com.
The S&P 500® is widely regarded as the best single gauge of large-cap U.S. equities. There is over USD 9.9 trillion indexed or benchmarked to the index, with indexed assets comprising approximately USD 3.4 trillion of this total. The index includes 500 leading companies and covers approximately 80% of available market capitalization.
The MSCI EAFE Index is designed to represent the performance of large and mid-cap securities across 21 developed markets, including countries in Europe, Australasia and the Far East, excluding the U.S. and Canada. The Index is available for a number of regions, market segments/sizes and covers approximately 85% of the free float-adjusted market capitalization in each of the 21 countries.
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