Dollar edges higher ahead of Fed rate decision; euro slips slightly
Tilting portfolios toward global equities ex-US continues to post solid results for investment strategies this year, based on a set of ETFs through Tuesday’s close (Sep. 9). Leadership has switched back in favor of American shares in recent months, but so far foreign stocks remain well ahead of US stocks for the year-to-date comparison.
The Vanguard Total International ETF (VXUS) is up 24.1% in 2025, a sizzling performance that continues to leave US stocks far behind, based on the 11.6% rise for the SPDR S&P 500 ETF (NYSE:SPY).
Notably, all the international proxy funds in the chart above continue to post year-to-date returns well above the year’s rise for US shares.
Impressive, but there are hints that the leadership in global stocks ex-US is fading. Consider the ratio for VXUS vs. SPY, a proxy for relative performance of foreign vs. American shares. When this indicator is rising, international is outperforming, and vice vera, per the chart below. The strong outperformance this year in foreign companies peaked in mid-April, and US stocks have outperformed since then.
The reversal in favor of US shares has yet to show up in the year-to-date comparisons. The stability for this relative performance measure in recent weeks leaves room for debate about whether the strength in foreign stocks reflects consolidating gains or an early sign that global shares are again set to trail US equities.
The longer-term chart for the VXUS:SPY ratio (shown below) suggests caution for deciding that this year’s outperformance via foreign shares is a new secular trend rather than another short-term trend reversal.
Viewed in context with history, 2025’s strength in offshore equities still looks like noise in a longer-term trend that favors US stocks. Nothing’s written in stone, of course, but the case for persuasively arguing that international equities will continue to outperform US stocks remains a work in progress.
Keep in mind that even if the broad trend for international stocks writ large fades again vs. the US, regional and country markets can still outperform. Nonetheless, the loss of a big-picture tailwind wouldn’t help.