Is the recent outperformance of international stocks sustainable?

International equities have underperformed the U.S. by a cumulative 189% over the past 13 years (in U.S. dollars). Unsurprisingly, many investors are underweight international, with the average portfolio analyzed by our Portfolio Insights team showing a 22% weighting to international equities (versus a “neutral” 35%). Investors should always look forward: a new global economic cycle is beginning in which international can take the baton from the U.S. due to: valuations, U.S. dollar, and cyclicality. Since early November, when vaccine trial results were first announced, international has outperformed the U.S. by 3.9%pts – only the beginning of the rotation.