10 Reasons to Consider Investing in International Equities
International stock markets are capturing a growing share of global economic growth as wealth and consumption increases beyond U.S. borders. We believe there are many reasons investors can benefit over the long term from this accelerating trend.

  1. Investors Exhibit a Home Bias: U.S. stocks account for 52% of global equity market cap but make up 75% of U.S. retail investors’ equity portfolios.1
  2. More Diverse Opportunities: 76% of the world’s companies valued over $1B in market cap live outside of the U.S.2
  3. Shrinking Slice of the Pie: The U.S. share of global GDP is expected to shrink from 22% in 2017 to 17% by 2060.3
  4. Companies Are Becoming More Global: Many multinationals generate a significant amount of sales from outside their home region.4
  5. Bigger Returns Beyond Borders: The U.S. stock market, as measured by the S&P 500 Index, has never been the best performing market in the world over the past 25 years.5
  6. Market Leadership Typically Runs in Cycles: Performance of international vs. U.S. equities ̶measured by the MSCI EAFE Index and S&P 500 Index ̶ have had 12 lead changes since 1971.6
  7. Diversification Is Key: Decades of academic research support diversifying a portfolio across different asset classes to reduce risk and potentially enhance returns.
  8. Timing the Market Is Difficult: Missing the six best months of the MSCI EAFE Index since inception would cost investors nearly 2% per year.7
  9. Americans Increasingly Consume Foreign Goods: Consumption of domestic goods has steadily slipped over the past 40 years. Owning foreign equities is a great way to capitalize on this trend as it grows larger.8
  10. Exposure to New Growth Opportunities: Many growing and established brands are located outside of U.S. borders. Virtually all global-branded alcohol companies are located overseas while top luxury brands call Europe home.

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  1. ^Source: FactSet, as of 12/31/17. Weights in MSCI All Country World Index–by region. Morningstar as of 12/31/17. Includes U.S. Open-End and ETF ex MM and FOF assets. The World Stock category is split to reflect 12/31/17 asset allocation: 52% into U.S. Category Group, 36% into International Developed Category Group and 12% into Emerging Markets Category Group. U.S. Domiciled Fund and ETF Equity Assets–by region. Analysis excludes institutional share class assets as defined by Morningstar. 
  2. ^Source: Bloomberg, 12/31/17. Data depicts the common shares of actively traded stocks.
  3. ^Sources: FactSet, 6/30/18, OECD, 6/30/18. Estimates may not be achieved. Latest data available. 
  4. ^Source: MSCI, as of 12/31/17.
  5. ^Source: FactSet, 12/31/17. Based on calendar year price return (in USD) for each MSCI country index represented in the MSCI ACWI ex-USA and the S&P 500 Index. Past performance does not guarantee future results.
  6. ^Source: Morningstar, 12/31/17. Past performance does not guarantee future results.
  7. ^Source: Morningstar, 12/31/17. Based on MSCI EAFE Index Annualized Gross Returns (1970–2017). Past performance does not guarantee future results. 
  8. ^Source: Bureau of Economic Analysis, 12/31/16. *2010–2016. Latest data available.