Global Stocks Trump US Stocks in 2025 with Historic Outperformance

Global stocks have outperformed US stocks in 2025 by nearly 10 percentage points, with the iShares MSCI All Country World Index Ex US ETF surging 20.5% year-to-date. This marks the largest annual outperformance of international stocks over US equities since 2009. The trend, known as "US exceptionalism," has seen US stocks consistently lead global markets over the past 15 years. However, several global stocks, including Doosan Enerbility Co., Hyundai Rotem Company, and Lundin Gold Inc., have outperformed Palantir Technologies Inc. with gains north of 150% in 2025.

In a significant turn of events, global stocks have outperformed US equities in 2025 by nearly 10 percentage points, as indicated by the iShares MSCI All Country World Index Ex US ETF, which surged 20.5% year-to-date [1]. This marks the largest annual outperformance of international stocks over US equities since 2009. The trend, known as "US exceptionalism," has seen US stocks consistently lead global markets over the past 15 years. However, several global stocks, including Doosan Enerbility Co., Hyundai Rotem Company, and Lundin Gold Inc., have outperformed Palantir Technologies Inc. with gains north of 150% in 2025.

Several factors contribute to this global dominance. More than half of the global market is located outside the United States, providing investors with a broader universe of investment opportunities [1]. International markets offer the potential for sector diversification, as they are less heavily weighted toward information technology compared to the U.S. stock market [1]. Additionally, many international companies have strong, profitable balance sheets and favorable growth prospects, making them attractive investment opportunities with appealing valuations [1].

Moreover, investing internationally offers exposure to different currencies, which can provide diversification benefits and potentially improve returns. Currency exposure allows investors to mitigate risks associated with fluctuating exchange rates [1]. Furthermore, smaller emerging market economies are growing faster than the U.S. economy, providing investors with access to fast-growing economies around the globe [1].

Despite the impressive performance of international stocks in 2025, it is essential to remember that investing involves risks. International investments involve additional risks, including differences in financial accounting standards, currency fluctuations, geopolitical risk, foreign taxes and regulations, and the potential for illiquid markets. Investing in emerging markets may accentuate these risks [1].

In conclusion, the outperformance of international stocks in 2025 underscores the importance of global diversification in investment portfolios. While US stocks have historically led global markets, the current trend suggests that investors should consider allocating a portion of their portfolios to international stocks to benefit from the broader global market opportunities.

References:
[1] https://international.schwab.com/story/why-invest-international-stocks