The past 15 years have been exceptionally strong for investors in U.S. markets. Since the bottom of the Great Financial Crisis in March 2009, the S&P 500 has dramatically outperformed international markets. This period marked the start of a long stretch of U.S. dominance in global equities.
However, looking at a longer time horizon tells a more balanced story. Historically, leadership between U.S. and international markets has rotated. There have been multi-year periods where international equities outperformed U.S. stocks, just as the U.S. has done over the past decade and a half. In fact, international stocks outperformed U.S. markets in 2025, and several factors suggest that trend could continue.
Some of the forces that could support stronger international performance include:
- A potentially weaker U.S. dollar
- Lower valuations for international equities compared to U.S. stocks
- Capital flows that tend to follow emerging market trends
One important driver of international investment performance is currency movement. The value of the U.S. dollar, measured by the U.S. Dollar Index, can significantly impact returns for global investors.
For example, if a U.S. investor purchases foreign equities and the dollar weakens relative to that currency, the investor benefits from both the stock market return and the currency movement. Conversely, foreign investors in U.S. markets may see their gains reduced if the dollar declines relative to their home currency.
Over the last 15 years, the combination of strong U.S. equity returns and a relatively strong dollar has attracted enormous foreign investment into U.S. markets. In 2009, foreign investors held roughly $2.5 trillion in U.S. equities. By 2024, that figure had grown to nearly $16 trillion. This has contributed to what we call “investment creep.” As U.S. stocks outperform, they gradually become a larger portion of global indices and portfolios. Today, U.S. equities represent over 70% of some global equity benchmarks.
The result is that many investors who believe they hold globally diversified portfolios are actually heavily concentrated in U.S. assets. This concentration has occurred naturally as portfolio managers increased exposure to markets that were delivering the strongest returns. That strategy works well while leadership remains the same—but market leadership rarely stays constant forever.
If global capital flows begin shifting back toward international markets, investors who are overly concentrated in U.S. assets could face unexpected volatility.
What Investors Should Consider
When reviewing your 401(k) or retirement portfolio, it is important to understand what you actually own.
If you hold international funds, look closely at their allocations to ensure they are truly diversified. If your portfolio has become heavily tilted toward investments that have performed well over the past decade, it may be worth considering whether broader diversification is appropriate.
We are entering a period of significant global change—geopolitics, trade relationships, currency dynamics, and technological disruption are all evolving rapidly. No one can predict exactly how markets will respond.
That is why diversification remains one of the most effective long-term investment strategies.
Ensuring your retirement portfolio is balanced across markets and asset classes can help protect against shifts in market leadership, currency movements, and unexpected economic changes.
This material is for general information and educational purposes only and is not intended to provide specific advice or recommendations for any individual.
Investing involves risk including the loss of principal. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes.
Any economic forecasts set forth may not develop as predicted and are subject to change.
Check out our more in depth read here.