Have international stocks ever outperformed the S&P 500?
US equities have dominated international equities over the past decade, but in the decade before that, it was international equities that were on a hot streak. The MSCI EAFE Index, which includes companies in emerging and developed markets, outperformed the S&P 500 Index seven times between 2000 and 2009.
Key Takeaways. U.S. stocks have outperformed global equities over the past 15 years, leading many investors to believe there is no good alternative. However, non-U.S. stocks may be attractive due to lower valuations, higher dividend yields and growth potential in select regions.
The S&P International 700 measures the non-U.S. component of the global equity market through an index that is designed to be highly liquid and efficient to replicate. The index covers all regions included in the S&P Global 1200 except for the U.S., which is represented by the S&P 500®.
| Fund | 2023 performance (%) | 5yr performance (%) |
|---|---|---|
| MS INVF US Insight | 52.26 | 34.65 |
| Sands Capital US Select Growth Fund | 51.3 | 76.97 |
| Natixis Loomis Sayles US Growth Equity | 49.56 | 111.67 |
| T. Rowe Price US Blue Chip Equity | 49.54 | 81.57 |
Video Player is loading. The best performing Sector in the last 10 years is Information Technology, that granded a +20.68% annualized return. The worst is Energy, with a +4.65% annualized return in the last 10 years.
Advantages of International Diversification
International stocks offer U.S. investors diversification, reducing reliance on domestic markets and potentially enhancing returns.
In essence, the U.S. has not been as expensive as perceived, and the rest of the world has not been as cheap. That may be the case again in 2024. Therefore, a strategy that includes U.S. and international stocks may continue to outperform one that excludes U.S. equities, even though non-U.S. markets appear cheaper.
Roughly 40% of S&P 500 revenues are generated outside of the U.S., and about 58% of Information Technology company sales were sourced from abroad.
Roughly 40% of sales generated by S&P 500 companies come from outside the U.S.
For a company to be included in the S&P 500, it must fit the following guidelines: Based in the U.S. Publicly traded on NASDAQ or NYSE. Only common stock.
How much was $10,000 invested in the S&P 500 in 2000?
Think About This: $10,000 invested in the S&P 500 at the beginning of 2000 would have grown to $32,527 over 20 years — an average return of 6.07% per year.
Rowe Price U.S. Equity Research fund (ticker: PRCOX) is in this exclusive club, having bested—along with a team of about 30 research analysts—the S&P 500 index for the past five years on an annualized basis. U.S. Equity Research is a Morningstar five-star gold-medal fund.
We took a look at the best performing S&P 500 stocks over the past five years, with the top three performers being NVIDIA Corporation (NASDAQ:NVDA), Enphase Energy, Inc. (NASDAQ:ENPH), and Enphase Energy, Inc.
Investors looking for stocks poised to perform well in 2024 might want to consider industrials — companies that make stuff that manufacturers use to make stuff ultimately purchased by commercial and retail customers.
To put this into perspective, we visualized the performance of gold alongside the S&P 500. See the table below for performance figures as of April 12, 2024. Over the five-year period, gold has climbed an impressive 81.65%, outpacing even the S&P 500.
Stock Market Average Yearly Return for the Last 10 Years
The historical average yearly return of the S&P 500 is 12.68% over the last 10 years, as of the end of February 2024. This assumes dividends are reinvested. Adjusted for inflation, the 10-year average stock market return (including dividends) is 9.56%.
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.
In general, Vanguard recommends that at least 20% of your overall portfolio should be invested in international stocks and bonds. However, to get the full diversification benefits, consider investing about 40% of your stock allocation in international stocks and about 30% of your bond allocation in international bonds.
Foreign markets can be more volatile than U.S. markets due to increased risks of adverse issuer, political, market or economic developments, all of which are magnified in emerging markets. Foreign securities are subject to special risks, including currency fluctuation and political and economic instability.
The average stock market return is about 10% per year for nearly the last century, as measured by the S&P 500 index.
Which stock will grow the most by 2030?
- Microsoft (MSFT) Source: The Art of Pics / Shutterstock.com. ...
- Berkshire Hathaway (BRK-A, BRK-B) ...
- Eaton (ETN) ...
- Lennar (LEN) ...
- Mastercard (MA) ...
- Itochu (ITOCF) ...
- Jacobs Solutions (J)
| Period | Annualized Return (Nominal) | Annualized Real Return (Adjusted for Inflation) |
|---|---|---|
| 10 years (2012-2021) | 14.8% | 12.4% |
| 30 years (1992-2021) | 9.9% | 7.3% |
| 50 years (1972-2021) | 9.4% | 5.4% |
The equivalent of the S&P 500 in Europe is the STOXX Europe 600 index, as it represents the performance of European companies across various sectors.
The S&P 500 is a stock market index composed of about 500 publicly traded companies. You cannot directly invest in the index itself. You can buy individual stocks of companies in the S&P 500, or buy an S&P 500 index fund or ETF.
The overall 2018 results show that foreign sales as a percentage of total S&P 500 sales decreased to 42.90% from 43.62% in 2017 (2016 was 43.16%, 2015 was 44.35%, and 2014 was 47.82%).
