Is 2025 the Year to Invest in International Stocks?
U.S. equities, particularly large-cap stocks, have dominated returns for over a decade. The S&P 500 delivered 15.3% annualized gains in the past ten years through September 30, nearly doubling the 8.4% return of developed international markets. Yet 2024's first three quarters flipped the script—international equities surged 25.3% versus the S&P's 14.8%.
While such outperformance may not persist, the valuation gap suggests international markets could continue narrowing the performance divide. Diversification through ETFs like Vanguard's VXUS, which tracks 8,700 non-U.S. stocks across Europe, Pacific, and emerging markets, offers exposure without single-stock concentration risks. Top holdings include Taiwan Semiconductor and Nestlé at just 2.8% and 1.4% weightings respectively.
