International equities have significantly outperformed U.S. stocks since November 2024, delivering approximately 15% better returns, according to Seymour. This turnaround serves as a crucial inflection point, despite not completely erasing a decade of lagging returns. "In a 14-month span, you've seen international outperform the U.S.," Seymour noted. Although the ten-year performance still looks unfavorable compared to the U.S., "it really is a story of where global growth has picked back up," he added.
As international equities constitute around 30-40% of global market capitalization, many U.S. investors hold a structurally low exposure at about 12-15%, often even less, said Seymour. Over the past decade, global equities outside the U.S. underperformed domestic markets notably, with the iShares MSCI ACWI ETF (ACWI) underperforming by approximately 60%. This disparity influenced investor behavior, causing a capital inflow into U.S. equities, mainly mega-cap tech stocks, making it a generational dynamic where market cap growth in the U.S. "choked off a lot of international investing."
Tim Seymour, Chief Investment Officer at Seymour Asset Management, as well as a portfolio manager on the Amplify CWP International Enhanced Dividend Income ETF (IDVO), remarked, "This is not people saying ... this is a time to trade global markets," during a recent appearance on CNBC's "ETF Edge." A decade of underperformance ended in late 2024, maintaining its momentum through early 2026. This change, coupled with concerns over U.S. market concentration, has spurred investors to re-evaluate their international market exposure.
International equities, after years of underperformance, are garnering interest again, with investing experts suggesting this trend may continue. Popular among U.S. investors for international exposure is the iShares MSCI Emerging Markets ETF (EEM), boasting $26.55 billion in assets and a 42% return over the past year. The iShares MSCI ACWI ETF has risen by 20%, surpassing the S&P 500's return by about 5%. Seymour suggests a 70%-30% allocation tilt toward developed markets for those looking to diversify overseas.
Renewed interest in overseas markets is partly due to currency dynamics. A declining U.S. dollar has enhanced returns for dollar-denominated investors in foreign assets. Additionally, metals are experiencing a surge as investors seek alternative value stores, a phenomenon Seymour characterizes as a global rather than a strictly U.S. trade.
Jon Maier, J.P Morgan Asset Management's chief ETF strategist, mentioned on "ETF Edge," that "These are all providing tailwinds and a weakening dollar, of course, where this is leading investors to diversify their overall portfolios that had been previously U.S.-centric portfolios."
Seymour emphasized that improving fundamentals are crucial for those considering adding international stocks to their portfolios. They are witnessing earnings growth in regions previously marked by stagnation. Japan is a prime example, where corporate governance reforms and shareholder focus are beginning to yield positive returns. Europe is also gaining from reduced interest rates, fiscal policy, and regulatory changes. Seymour argues that European deregulation might be a more potent trigger for growth.