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Is the US Stock better than the international fund
Executive summary
International stocks have outperformed U.S. stocks in large parts of 2025, with several trackers showing international indices and funds beating U.S. benchmarks by double-digit margins in the year-to-date (for example, an 11% outperformance cited by multiple firms) [1] [2]. That said, long-term U.S. dominance — driven by large-cap tech — and valuation differences mean the question “Is U.S. stock better than an international fund?” depends on horizon, risk tolerance and portfolio goals [3] [4].
1. Markets are cyclical — performance depends on timing, not an absolute “better”
U.S. and international equities have traded periods of extended outperformance; the post‑2009 era favored U.S. stocks heavily, but 2025 has seen a reversal in sentiment and returns in many international markets [5] [6]. Visual and industry analysts note that cycles flip: international markets have historically outperformed during distinct decades and may be in such a phase now [7] [3].
2. What happened in 2025: a pronounced international rebound
Multiple asset managers and press pieces document a sharp rotation into non‑U.S. equities in 2025 — BlackRock and New Capital cite international equities outperforming U.S. peers by about 11% year‑to‑date, and Morningstar reports funds with higher non‑U.S. exposure generally fared better in early 2025 [1] [2] [6]. CNBC and Charles Schwab note specific regional strength — Japan, parts of Asia and Europe — and that broad international indices like MSCI ACWI ex‑USA delivered strong returns relative to the S&P 500 in 2025 [8] [9] [7].
3. Valuation and concentration explain much of the shift
Commentators point to expensive U.S. valuations — led by mega‑cap tech — versus relatively cheaper international markets coming into 2025; lower starting valuations abroad amplified upside when investor flows rotated outward [3] [7]. Firms also highlight that global indices remain heavily U.S.‑weighted (roughly 70% U.S. weight in some global benchmarks), so “global” exposures can still be dominated by American names unless you explicitly choose ex‑U.S. funds [4].
4. Diversification remains the practical answer for most investors
Advisers and outlets stress that owning a mix — including broad international funds — reduces home‑country bias and captures different sector and cyclical opportunities; practical vehicles include MSCI ACWI ex‑USA trackers or total international ETFs/mutual funds [9] [10]. Charles Schwab and J.P. Morgan explicitly recommend considering international exposure as part of a strategic allocation given shifting weights in global indices and potential for different economic cycles [7] [4].
5. Risks and nuances of international investing
International funds bring extra considerations: currency swings, political/regulatory risks, and different liquidity and governance regimes can increase volatility or alter returns in the short term [2] [4]. Morningstar and other outlets note that active managers with flexible mandates could have benefited by repositioning ahead of the rebound — but past decade underperformance had made that call difficult [6].
6. Short‑term evidence doesn’t overwrite long‑term history
Long‑term datasets still favor U.S. stocks across many multi‑decade periods — for example, CRSP and other long‑run studies show higher average annual returns for U.S. equities through 2024 — so a strong 2025 does not prove a permanent regime change [11]. Analysts caution that vindication of long‑term international allocation requires sustained outperformance over years, not only a strong single year [8].
7. How to decide for your portfolio
If your horizon is long and you already have heavy U.S. concentration, evidence-based advice in the coverage suggests increasing international exposure for diversification and valuation reasons; if you rely on momentum or short horizons, tactical tilts toward international funds could have worked in 2025 but carry timing risk [9] [7]. Consider whether you want broad ex‑U.S. exposure, developed‑only, or emerging‑markets tilt — ETFs like VXUS and fund lists compiled by outlets offer practical starting points [12] [10].
8. Bottom line — no universal “better”; context matters
Available reporting shows international equities were better in 2025 through mid‑year and many commentators argue international markets looked attractively valued versus U.S. peers [1] [3]. However, long‑term U.S. outperformance in prior decades and the structural U.S. weight in global indices mean the right answer depends on each investor’s time frame, diversification needs and risk tolerance [4] [11].