Are International Stocks Taking Center Stage Again?

One of the most important jobs we have as advisors is making sure clients are properly diversified with their investments. Studies show that most investors around the world show ‘home bias’, meaning most US investors have heavier weights to US stocks, Australian investors have heavier weights to Australian stocks, etc.

Since we’re here in the US the majority of our clients show US home bias. When the US market is the one of the highest performing countries, as it was for much of the past decade, this is perfectly acceptable. 

However, history shows that there are periods when the US market underperforms the broader global markets. For example, during the early 2000s many investors refer to this as the 'lost decade' after the dot com bubble and the Global Financial Crisis. If you were only invested in the US your performance was relatively flat. Investors who were globally diversified saw slightly stronger performance. (Still not great, but slightly better.)

The US has outperformed international markets almost every year since 2008 - this is an uncharacteristically long run! Gains in Big Tech and most recently AI stocks have led this performance and will continue to lead this outperformance….not so fast!

2025 showed a much different result. Using Vanguard funds as our benchmark - international markets outperformed by 15% last year! VTIAX–Vanguard Total International Stock Index returned 32% in 2025 vs VTSAX - Vanguard total Stock Market Index (an all US stock index) returned 17%.

Data from PortfolioVisualizer. US vs International stock performance in 2025 using Vanguard funds

2026 continues this trend. As of me writing this near the end of February:

-VTIAX (international) has returned 11%

-VTSAX (US) has returned about 2%

Data from PortfolioVisualizer. US vs International stock performance so far in 2026 using Vanguard funds

Now assuming a trend based on this small sample of data is incredibly dangerous. I am not saying you should go put all of your money into international stocks. The US is still the biggest stock market in the world…by around 10x bigger than the next country. But if you’re ignoring international stocks entirely and showing too much home bias it could come back to bite you.