Investing Beyond the US—Why You Should Consider a Global Approach

Good Returns Aren’t Exclusive to US Stocks

The United States is the largest economy in the world and occupies the dominant share of the global stock market.ⁱ Given its strong economic position, liquid capital markets and plethora of large multinational corporations, it’s natural for US investors to think they don’t need to stray outside the US market to seek investment returns. However, while US stocks have outperformed for much of the last 15 years, US dominance is a relatively recent phenomenon. For example, non-US stocks handily outperformed US stocks for long stretches in the 1970s, 1980s and as recent as the 2000s.ⁱⁱ

It's also important to note that US outperformance doesn’t mean the US is the best performing market. For instance, Exhibit 1 reveals that over the past decade, the US has ranked among the top three performing stock markets just three times, and has not held the number one spot. Country leadership rotates regularly and there’s little predictability as to which countries are among the top performers each year. We believe a globally diversified portfolio can allow you to capitalize on these leadership rotations.

Exhibit 1: Top 3 Performing Stock Markets Over the Past 10 Years

Source: FactSet, as of 1/27/2025. The above returns reflect the Total Returns of the top 3 performers of the 23 developed countries that comprise the MSCI World Index, 12/31/2014 – 12/31/2024. All returns are presented in dollars. All returns are net of international withholding taxes, except for US, which are gross.

A Global Approach Can Reduce Volatility

Another benefit of a global approach is the potential for reducing portfolio volatility. Investing in stocks can be a bumpy road at times, but investing globally can help smooth the ride. A global stock portfolio will likely experience less volatility over time than a US-only portfolio because the broader global approach helps offset the risk of steep dips or spikes due to any single country or sector. For example, the US stock market is disproportionately driven by stocks in Technology and Tech-adjacent sectors.ⁱⁱⁱ When these stocks are in favor, it helps the US market. But when Tech stocks underperform—as they have so far in 2025—it serves as a headwind.^iv

Exhibit 2 shows how taking a global approach can help reduce volatility for US investors. As the graph shows, a 100% US stock portfolio (on the leftmost point) has higher expected annual volatility as measured by standard deviation compared to various levels of blending in some non-US stocks. As with many things, the volatility-dampening benefit of non-US stock exposure wears off after a certain point and overexposure can even potentially contribute to higher volatility if taken too far. But there’s plenty of room to find an appropriate balance and benefit from non-US stock exposure, in our view. When assessing this, we believe a global benchmark such as the MSCI World Index can provide a helpful reference point for investors looking to understand how much of their portfolio they should consider allocating to non-US stocks.

Exhibit 2: Equity Allocation to Non-US Stocks and Percent Change in Standard Deviation

Source: FactSet, as of 3/4/2025. Monthly returns from 12/31/1969 – 12/31/2024. US stocks represented by MSCI USA Index Total Return. Non-US stocks represented by MSCI World ex USA Index Total Return (12/31/1969 – 12/31/2024).

An Extra Benefit of Global Investing—Currency Diversification

Currency diversification is another added benefit of global investing, and one that is often overlooked by investors. The global currency market operates 24 hours a day, seven days a week, and exchange rates constantly fluctuate. These movements can significantly impact performance of international investments in the short-term. For example, when the US dollar weakens against other currencies, international stocks denominated in foreign currencies may perform better, enhancing returns for US-based investors who hold those stocks. Conversely, when the US dollar is strong, it can dampen the performance of those same investments.

This is where global portfolios can be beneficial. By spreading investments across stocks denominated in different currencies, you can help reduce the potential impact of significant fluctuations in any one currency, including the US dollar. The effect of currency diversification in your portfolio is another potential benefit of a global approach to investing.

Want to Dig Deeper?

For more on the benefits of a global investment approach, you can watch Fisher Investments' founder, Executive Chairman and Co-Chief Investment Officer Ken Fisher’s recent video, “Fisher Investments Reviews Why Investors Should Invest Globally”.

In this article, we noted non-US stocks have gotten off to a strong start in 2025. For more on why we think non-US stocks should continue to lead markets in 2025, read Ken Fisher’s New York Post column, “Here’s my surprise prediction for the stock market in 2025 — and pessimists worldwide should pay attention”.

For more market insights from Fisher Investments, read our latest articles.

Investing in securities involves a risk of loss. Past performance is never a guarantee of future returns. The results for individual portfolios and for different periods may vary depending on market conditions and the composition of the portfolio. Investing in foreign stock markets involves additional risks, such as the risk of currency fluctuations. The foregoing constitutes the general views of Fisher Investments and should not be regarded as personalized investment advice. Nothing herein is intended to be a recommendation. The opinions expressed are subject to change without notice.

ⁱSource: International Monetary Fund, World Economic Outlook as 12/31/2024.
ⁱⁱSources: Global Financial Data, Inc., as of 1/7/2014; S&P 500 Total Returns from 12/31/1969 – 12/31/1988. FactSet, as of 3/14/2024. S&P 500 Total Returns from 12/31/1988 – 12/31/2023. MSCI EAFE Total Returns from 12/31/1969 – 12/31/2023, net of foreign tax withholdings.
ⁱⁱⁱSource: FactSet, as of 2/20/2025. MSCI Europe and S&P 500 sector weights, as of 2/19/2025. For informational purposes only. See additional disclosures at the end of the presentation. Due to rounding, some figures may not add up precisely.
^ivSource: FactSet as of 4/29/2025. MSCI World Information Technology Total Return Index and MSC World Total Return Index returns 12/31/2024 – 4/25/2025.