Despite war, tariffs and a host of other threats that weigh on the outlook for the global economy, the rise of the international equity premium over US stocks remains intact this year, based on a set of ETFs through Tuesday’s close (June 24).
Investing nearly anywhere beyond America’s shores has been a winning strategy year to date. The strongest outperformance has been in central and eastern Europe (CEE) via a closed-end fund (no US-listed ETFs for this region are available). The portfolio has surged 36% so far in 2025. In second- and third-place: stocks in Africa (AFK) and Latin America (ILF), which are up nearly 28% and 25%, respectively.
The international benchmark (VXUS), weighted by market cap, is also posting a hefty premium over US shares with a 16.8% rally this year. US stocks, by comparison are up a modest 4.2% via SPDR S&P 500 ETF (SPY), marking the weakest gain for the international opportunity set in the graph above.
Equities ex-US have underperformed the US for years, but analysts are expecting that this year’s turnaround will endure. Global fund managers surveyed by Bank of America this month predict that international stocks will stay hot for the foreseeable future. More than half of the investors — 54% —surveyed from June 6 to June 12 anticipate that international equities are set to be the best-performing asset over the next five years.
No one knows if the forecast will hold up, but based on the upside momentum for stocks ex-US at the moment it seems premature to be against this year’s trend.