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Not always US equities

Apr 30, 2024

There’s a prevailing belief among investors that U.S. stocks consistently outshine their international counterparts. Over the past half-century, MSCI USA has indeed enjoyed sustained periods of dominance over MSCI EAFE, spanning from 3.3 years to 14.2 years. However, it’s crucial to consider three key points: Firstly, international equities have also had prolonged periods of outperformance against their U.S. counterparts. For instance, they surpassed U.S. stocks by 65% in the seven years leading up to the financial crisis. Secondly, the latest 14-year reign of U.S. supremacy was the lengthiest in the past five decades. And thirdly, this dominance has waned since the recovery from the pandemic, with international stocks demonstrating comparable performance. Given current valuations, monetary policies, and global conditions, there’s a strong possibility that international stocks could stage a robust comeback.

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