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Overseas Stocks Have Underperformed Now What?

Foreign equity markets, especially emerging markets, have markedly lagged the S&P 500 in recent years. Yet there remain very good reasons to remain diversified overseas.

As the chart below indicates, U.S. stocks constitute a disproportionate amount of the worlds stock market capitalization relative to the size of the economy. Conversely, emerging market stock markets are very modestly sized relative to the economic importance of these regions.

Investors with very long time horizons should expect a gradual convergence over time, with emerging markets becoming a larger percentage of global stock markets. However, this dynamic will likely unfold gradually over decades, which means investors will require patience if they wish to benefit fully from this trend.


DISCLAIMER: Past performance does not predict future results. This report is based on data obtained from sources we believe to be reliable. Hefren-Tillotson does not, nor any other party, guarantee the accuracy or completeness of this report or make any warranties regarding results obtained from its usage. All opinions and estimates included in this report constitute the firms judgment as of the date of this report and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation to buy or sell the securities herein mentioned.

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