Short Description
After a decade of underperformance, international stocks are surging as experts urge U.S. investors to diversify portfolios in 2026 to capitalize on global growth and a weakening dollar.
Read Time: 3 minutes, 15 seconds
Main Article
A brutal decade of underperformance for international equities is conclusively over. Since November 2024, overseas markets have outperformed the U.S. by roughly 15%, marking a powerful inflection point. This shift is driven by a confluence of factors: a weakening U.S. dollar that boosts returns for dollar-based investors, genuine earnings growth in key regions, and a world where capital and trade are reorienting. The momentum has carried into 2026, prompting investment experts to declare that the opportunity for diversification is both timely and durable, moving beyond mere short-term momentum chasing.
Critical to this trend is the stark portfolio diversification gap among U.S. investors. While international stocks represent about 40% of global market cap, the average U.S. investor’s exposure is often as low as 12-15%. This structural underweight, a result of years of chasing U.S. mega-cap tech gains, now presents a significant tailwind. Regions like Latin America, powered by soaring commodity demand, have seen ETFs like the iShares MSCI Brazil ETF (EWZ) surge nearly 50% in a year. Meanwhile, precious metals like gold and silver, themselves global trades, have skyrocketed, further highlighting assets thriving outside the U.S. market’s orbit.
Looking forward, the outlook for investors in 2026 is increasingly global. Developed markets are also compelling. Japan is benefiting from years of corporate reform, while European banks and industrials are gaining from fiscal stimulus and deregulation. Furthermore, technology leadership is not a U.S. monopoly. South Korea’s memory chip giants and European semiconductor leaders like ASML are critical players in the global tech supply chain, offering targeted investment avenues. As global growth dynamics shift and geopolitical policies encourage international trade realignments, experts argue that maintaining a U.S.-centric portfolio could mean missing the next major wave of returns.
Short Summary
International equities are outperforming the U.S. market, ending a decade-long slump. Driven by a weaker dollar, stronger global earnings, and powerful commodity and tech trends, this shift offers a critical opportunity for U.S. investors to diversify. Adding developed international and select emerging market exposure is now seen as a strategic move for 2026 portfolios seeking growth and balance.
