Core Viewpoint - The ongoing conflict in Iran is prompting investors to reconsider their strategies, particularly the shift from U.S. stocks to international markets [1] Group 1: Market Reactions - Investors are increasingly cautious about reallocating funds from U.S. equities to foreign markets due to geopolitical tensions [1] - The uncertainty surrounding the Iran war is leading to volatility in global markets, affecting investor sentiment [1] Group 2: Investment Strategies - There is a noticeable trend of investors reassessing their portfolios in light of the conflict, with some opting to stay in U.S. markets for perceived safety [1] - The situation is causing a reevaluation of risk appetite among investors, influencing their decisions on asset allocation [1]

Core Insights - International stocks are experiencing significant declines due to a sharp increase in oil prices, with WTI and Brent crude nearing $100 per barrel, negatively impacting energy-importing developed economies [1] - Some Latin American emerging markets may see benefits from the rising oil prices, while the United States is also mentioned in the context of potential impacts [1] Industry Impact - The surge in oil prices is broadly negative for many developed economies that rely on energy imports, indicating a potential shift in market dynamics [1] - The performance of international stocks is closely tied to fluctuations in oil prices, highlighting the interconnectedness of global markets [1]

Core Viewpoint - Diversification is shifting from a defensive strategy to an offensive one, as international, emerging-market, small stocks, and value stocks have significantly outperformed the S&P 500, which has shown volatility without substantial movement this year [1] Group 1 - The S&P 500 has experienced significant fluctuations but has not made meaningful progress in terms of overall performance this year [1] - International and emerging-market stocks, along with small and value stocks, have seen substantial gains, indicating a shift in investment focus [1]

Core Viewpoint - International stocks are currently undervalued compared to U.S. stocks, with a price-to-earnings (P/E) ratio that is 40% lower than that of U.S. stocks [1][2]. Valuation Comparison - The average forward P/E ratio for U.S. stocks is approximately 28, while for non-U.S. international stocks, it is around 19 [2]. - U.S. stocks have seen a significant increase in valuations since 2015, primarily driven by the rise of major tech stocks [2]. Performance Trends - In 2025, non-U.S. developed market stocks returned 35.2%, and emerging market stocks returned 25.6%, significantly outperforming the U.S. stock market, which rose 17.7% [3][4]. - In 2026, international stocks continue to outperform, with the Vanguard FTSE Developed Markets ETF (VEA) up 8.7% year to date and the Vanguard Emerging Markets Stock Index Fund ETF (VWO) up 7%, while the S&P 500 index remains flat [5]. Future Outlook - European stocks are expected to have further upside potential due to strong global economic growth and increased fiscal and defense spending [5]. - Emerging markets, particularly in China, South Korea, India, and Brazil, are projected to see rising earnings, with Goldman Sachs forecasting a 16% return for EM stocks this year [6]. - Despite the potential for a rebound in U.S. stocks due to possible interest rate cuts by the Federal Reserve, they remain more expensive than international stocks, making international investments attractive [7].

US stocks haven’t been this out of favor relative to their international peers in more than five years, according to Bank of America’s Michael Hartnett https://t.co/O5NaZMqdRU ...

Core Insights - Investors have shifted focus from large-cap tech stocks to international and value stocks, marking a significant change in portfolio strategy [2][4][6] Group 1: Market Performance Trends - In 2022, emerging markets outperformed the S&P 500 for the first time since 2020, indicating a growing interest in international stocks [2] - The trend of international stocks outperforming continues into 2026, suggesting a broader market rotation away from U.S. leadership [2][6] - Historically, market leadership between U.S. and international stocks runs in multiyear cycles, with the average cycle length being just over eight years since 1975 [4][5] Group 2: Historical Context - The U.S. has outperformed international stocks for the past 15 years, but recent performance indicates that international equities are overdue for a resurgence [5][6] - The last significant period of international stock leadership occurred from 2002 to 2010, while the current U.S. leadership has lasted since 2010 [5] Group 3: Future Outlook - Fundamentals and valuations may support a shift towards developed international stocks, with the Vanguard FTSE Emerging Markets ETF identified as a strong investment choice to capitalize on this trend [7][8]

Core Insights - The article emphasizes the importance of including mid-cap stocks in investment portfolios alongside small-cap and international stocks [1] Group 1 - Mid-cap stocks are often overlooked but can provide significant growth opportunities [1] - Investors are encouraged to diversify their portfolios by adding mid-cap exposure to balance risk and return [1]

Core Insights - The Vanguard FTSE Developed Markets ETF (VEA) offers lower costs and a broader selection of developed-market stocks compared to the iShares MSCI ACWI ex US ETF (ACWX), which has a different sector mix [2][10] Cost & Size Comparison - VEA has an expense ratio of 0.03%, significantly lower than ACWX's 0.32% - As of January 9, 2026, VEA's one-year return is 35.8%, while ACWX's is 34.2% - VEA provides a dividend yield of 3.1%, compared to ACWX's 2.7% - VEA has a total asset under management (AUM) of $268.9 billion, while ACWX has $7.87 billion [3][4] Performance & Risk Analysis - Over the past five years, VEA's maximum drawdown is -29.70%, slightly better than ACWX's -30.06% - An investment of $1,000 in VEA would have grown to $1,331, while the same investment in ACWX would have grown to $1,267 [5] Portfolio Composition - ACWX tracks large- and mid-cap stocks from developed and emerging markets outside the US, with approximately 1,751 holdings; major sectors include Financial Services (25%), Technology (15%), and Industrials (15%) [6] - VEA focuses on developed markets in Europe, the Pacific, and Canada, holding over 3,800 stocks; its leading sectors are Financial Services (24%), Industrials (19%), and Technology (12%) [7][8] Investment Implications - International stocks outperformed U.S. markets in 2025, making both VEA and ACWX attractive options for investors seeking exposure to non-U.S. equities, despite their differing cost structures [10]

Group 1 - The iShares Core MSCI Total International Stock ETF (IXUS) has gained 36% over the past year, significantly outperforming the S&P 500 [2][8] - The fund has a total asset value of $51 billion and features an ultra-low expense ratio of 0.07%, making it attractive for investors seeking international exposure [2] - The MSCI All Country World ex-USA Index increased by 29% in 2025, driven by a weakening U.S. dollar and expectations of Federal Reserve rate cuts [5] Group 2 - A key macro factor influencing IXUS is the weakness of the U.S. dollar, which enhances the value of international stocks for U.S. investors [4][6] - JPMorgan Chase Global Research maintains a bearish outlook on the dollar for 2026, suggesting that continued dollar weakness could benefit IXUS [6] - The fund has significant geographic concentration, with seven of its top ten holdings being Canadian companies, indicating a reliance on Canadian economic conditions [7]

Core Insights - The stock market is reaching new all-time highs, prompting investors to focus on diversification strategies, particularly in international stocks and small/mid-cap growth stocks that offer more attractive valuations [1] Group 1 - Investors are encouraged to increase exposure to international stocks and small/mid-cap growth stocks due to their compelling trading opportunities [1] - Gary Alexander, with extensive experience in technology and startups, provides insights into current industry trends and investment themes [1]