Rotation to International: Real or Just Another Head Fake?
After more than 15 years of U.S. equity outperformance, international stocks are showing signs of renewed strength. Investors are asking: is this the start of a long-awaited shift or just another short-lived head fake?
To answer that, it helps to zoom out. From 2000 through 2009, international equities outpaced US equities by an average of 2.4% per year, growing $10,000 to $11,691 versus $9,179 for the S&P 500. The decade began with the bursting of the tech bubble, followed by a period where emerging and developed markets abroad led the charge fueled by commodity strength, a weaker dollar, and relative value. Then, around 2010, the script flipped. Since then, U.S. equities, driven largely by mega-cap growth and a wave of innovation have led nearly every global leaderboard. The result? A dramatic divergence in performance. The chart below illustrates just how wide that gap has become:
This prolonged dominance has led many to question the relevance of international exposure at all. But if the 2000s taught us anything, it’s that leadership rotates, and it often turns when investors least expect it.
It’s not just about chasing the next hot region; it’s about acknowledging that markets move in cycles. Just as international outperformed from 2000-2010 and the U.S. from 2010-2024, the next leg of leadership could come from a broader global base. And let’s not forget: 70% of listed companies, 96% of the global population, and 75% of GDP sit outside the U.S. For all its strength, the U.S. is only one part of the global opportunity set.
We’re not calling a top in U.S. stocks. But we are saying that global diversification is more than a box to check, it’s a strategic imperative. Whether or not this is the turning point, the case for broadening one’s perspective has rarely been stronger.
At CPC Advisors, we’re actively positioning portfolios to reflect that view: still participating in U.S. markets, but also leaning into the growing opportunity abroad.
