Given that performance leadership by U.S. or international equities typically runs in cycles, we believe another period of outperformance by international stocks is inevitable. Yet, many U.S. investors’ portfolios still reflect a bias toward domestic equities, a bias that has been reinforced in recent years by the longest stretch of U.S. equities outperforming international equities in history. As a result, many U.S. investors are underweight international equities.

Recent performance suggests that the shift back to international equities leadership may have already begun. Although it is too soon to tell whether that shift has in fact taken place, it is clear that a lack of exposure to international equities can be costly. Now might be a great time for U.S. investors to evaluate their international exposure.

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