Are the Times a-Changin’ for International Equities?

Executive Summary

• Many have come to question the benefits of global diversification after years of U.S. equity dominance, but recent market shifts suggest the tide may be turning.
• Foreign stocks should serve an evergreen role in portfolios, offering structural advantages such as access to sectors underrepresented in the home market, potential for enhanced risk-adjusted returns and a more fruitful landscape for active management.
• Current conditions, including stretched U.S. valuations, a weakening dollar and shifting macroeconomic currents, make international equities more compelling today than in recent years.
• Investors should review their asset allocation and assess whether they have taken a home bias too far and consider layering in international equities to round out a diversified portfolio.

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