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Widening the lens: Revisiting the case for non-U.S. stocks
After years of underperformance, non-U.S. equities have been a tough sell for investors, but we see growing reasons to add them to a diversified portfolio today.
![Janus Henderson Investors](https://www.janushenderson.com/wp-content/uploads/sites/4/jhi-logo-150-150.png?w=150"){kind=logo}
Mar 28, 2025
5 minute read
5 minute read
Key takeaways:
- Though non-U.S. equity benchmarks have trailed the S&P 500 Index for more than a decade, a number of stocks outside the U.S. have delivered some of the best gains during that period.
- Even so, many of these equities trade at a relative discount as investor enthusiasm pushed the S&P 500 to new highs.
- In our view, the valuation gap creates room for upside and an opportunity to diversify equity holdings at a time when history suggests investors should consider looking more globally.
After more than a decade of outperformance, U.S. stocks have come to dominate many equity portfolios, as enthusiasm for artificial intelligence propelled Magnificent 7 tech stocks higher and U.S. growth outpaced peers.
But outside the spotlight, a select group of non-U.S. equities has quietly – but decidedly – made a case for itself. Each year for the past decade, an average of 82 of the top-100 performing stocks in the MSCI All Country World Index were headquartered outside the U.S., their gains driven by strong business models and secular tailwinds that mattered more than their physical address.1 For investors wary of allocating away from the U.S., these stocks suggest a selective approach to non-U.S. markets could pay off, especially given gaps in valuation between U.S. and non-U.S peers and an equity cycle that is showing signs it could be due for a change.
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1 Morningstar, as of 31 December 2024.
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Mar 28, 2025
5 minute read
5 minute read
Key takeaways:
- Though non-U.S. equity benchmarks have trailed the S&P 500 Index for more than a decade, a number of stocks outside the U.S. have delivered some of the best gains during that period.
- Even so, many of these equities trade at a relative discount as investor enthusiasm pushed the S&P 500 to new highs.
- In our view, the valuation gap creates room for upside and an opportunity to diversify equity holdings at a time when history suggests investors should consider looking more globally.