Vanguard Says: International Stocks Could Beat the U.S. for Years

Core Insights - The U.S. stock market is underperforming in 2026, with the S&P 500 index down 0.03% and the Nasdaq-100 index down 2.2% year to date [1] - In contrast, international stocks are showing strong performance, with the Vanguard Total International Stock ETF (VXUS) up 9% year to date and 31% over the past year, significantly outperforming U.S. benchmarks [2][3] Group 1: International Stock Performance - The Vanguard Total International Stock ETF (VXUS) has outperformed the S&P 500 index and Nasdaq-100 index, with a 31% increase over the past year compared to 12% and 11.7% respectively [2] - Vanguard's research suggests that international stocks may continue to outperform U.S. stocks in the foreseeable future, indicating a potential shift in investment strategy [3] Group 2: Vanguard's Economic Outlook - Vanguard's 2026 economic and market outlook predicts average annual returns of 4.9%-6.9% for international stocks over the next decade, compared to 4%-5% for U.S. equities [4] - This forecast suggests that international stocks could significantly outperform U.S. stocks in the coming years, marking a notable change from the past 16 years where U.S. stocks dominated [5] Group 3: U.S. Stock Market Analysis - Vanguard's cautious stance on U.S. stocks is attributed to the belief that U.S. tech stocks are already priced for high earnings expectations, leaving limited upside potential [6] - Instead of focusing on tech stocks, Vanguard recommends considering high-quality U.S. bonds, U.S. value stocks, and international equities from developed markets [7]