A Whole New World? Why International Stocks May Finally Shine (2024)

FAQs

Why do people invest in international stocks? ›

Investors should consider such investments as an inexpensive way to hedge portfolios against a potential U.S. stock-market pullback. In particular, Japan, Europe and select emerging markets, such as Brazil, India, Vietnam and Mexico, offer attractive opportunities.

The stock market is also where companies raise capital and from which investors can grow their wealth. It thus plays a vital role in the global economy. Even if you don't trade on the stock market directly, it influences the products you buy, the type of jobs available, and the retirement you might plan.

International investing can be an effective way to diversify your equity holdings. While returns have lagged behind US markets, international ETFs provide diversification benefits as they tend to be less correlated to US equities.

Second, worldwide diversification allows the stock-bond ratio of a portfolio to be increased without raising the overall risk of the portfolio because returns between the broad US and International markets are not perfectly correlated.

2024 may be a good time to look for bargains in international stocks that have the long-term potential to deliver higher returns than US stocks. Fidelity's Asset Allocation Research Team (AART) forecasts that international stocks will outperform US stocks over the next 20 years.

However, unlike domestic stock funds, which invest primarily in US companies, international stock funds primarily invest in companies outside of the US.

The New York Stock Exchange (NYSE) is perhaps the world's most well-known stock exchange with its famous 9.30 am opening bell which is televised and presented by leading business figures and celebrities.

Foreign investors not only bring fresh capital, technology, competitive spirit and ideas to new markets; they also bring jobs. They employ nearly 80 million people worldwide, a figure that is roughly twice the size of Germany's labor pool – and one that has quadrupled over the past three decades.

Why Is the Stock Market Important to the United States? The stock market enables companies to raise money and the public to profit from their growth prospects.

Despite lagging in recent years, when you look historically: in the last 50 years, international stocks outperformed U.S. stocks in over 40% of all 10-year rolling time periods.

Which international fund is best? ›

Our research shows that below-average valuations for international stocks today suggest above-average returns in the next 15-20 years. That means non-U.S. stocks are priced at a discount relative to their U.S. counterparts.

Start by allocating 15% to 20% of your equity portfolio to foreign stocks. That's the percentage I typically maintain in the Vanguard portfolios. It's meaningful enough to make a difference in your overall returns, but not so much that it will ruin your portfolio when foreign markets temporarily fall out of favor.

International stocks have two main advantages: diversification and the potential to perform better than U.S. stocks over certain periods. In the past, non-U.S. stocks have had relatively low correlations with their U.S. stock counterparts, leading to better risk-adjusted returns for a globally diversified portfolio.

International investment is the process of allocating your money across different countries and regions, with the aim of diversifying your portfolio and maximizing your returns. It can offer you several benefits, such as exposure to new markets, lower risk, higher growth potential, and tax advantages.

Opening up to new target customer groups

Sometimes, companies have exhausted all the possibilities for growth in their native market. This is one of the main reasons why companies decide to enter a foreign market where they hope to expand their potential customer base.