Breaking News
Black Friday SALE: Up to 54% off InvestingPro! Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

U.S. Vs. International Markets: More Of The Same

By Mike Zaccardi, CFA, CMTStock MarketsOct 25, 2021 12:21AM ET
www.investing.com/analysis/us-vs-international-markets-more-of-the-same-200606135
U.S. Vs. International Markets: More Of The Same
By Mike Zaccardi, CFA, CMT   |  Oct 25, 2021 12:21AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

This article was originally published at The Humble Dollar.

Do I sound like a broken record? Last week, the performance gap between U.S. and foreign stocks widened even further. The Vanguard Total Stock Market Index Fund ETF (NYSE:VTI) has now returned 21.6% so far in 2021, while the Vanguard FTSE All World ex-U.S. ETF (NYSE:VEU) is up just 9.4%.

International funds’ relative weakness has become so routine that it rarely makes the financial news. What’s different this time: The economic landscape would seem to favor foreign shares, particularly emerging markets.

Go back one year. Stock markets around the world were in a garden-variety correction—dropping about 10% from their third-quarter peak—with technology companies feeling the brunt of the selling. Small caps and value sectors were holding up a little better.

Then the buying frenzy began anew, and we got the second wave of the COVID-19 bull market that began in March 2020. As 2021 dawned, foreign markets were outperforming, propelled in part by a weakening dollar. But the dollar reversed course and U.S. stocks soon nosed ahead—and that’s where they’ve stayed.

Now consider today’s economic backdrop: inflation fears, climbing commodity prices and rising interest rates. In the mid-2000s, when these factors converged, they proved bullish for foreign firms, especially those in emerging markets. In 2003, 2005 and 2007, emerging market indexes led the bull market charge. That isn’t happening this year. While commodities are on fire in 2021, shares of foreign companies just can’t find their footing—at least relative to the S&P 500.

If you’re like me, you own a globally diversified basket of low-cost index funds, which means just a portion of your portfolio is invested in large-cap U.S. stocks. It can feel like you’re missing out, even if your overall portfolio is up handsomely in 2021.

It’s even tougher for older investors who have a high allocation to bonds. Vanguard Total Bond Market ETF (NASDAQ:BND) is down 2.1% in 2021, rivaling its 2013 loss, which was the worst year since the fund began trading in 2007. And that’s with dividends reinvested. Seeing inflation eat away at returns only adds to the unpleasantness.

Bottom line: Financial markets are having a party—but many investors aren’t having a great time.

U.S. Vs. International Markets: More Of The Same
 

Related Articles

Anna Coulling
Where Next For Tesla? By Anna Coulling - Nov 26, 2021 1

In the pause point of celebrating Thanksgiving and a four-day weekend, I thought it would be a good time to review some stocks and have decided on the daily chart for Tesla...

U.S. Vs. International Markets: More Of The Same

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email