International equities: Betting on a single country is not always a winning strategy
Which countries have offered the best returns in recent years?
The rise of US tech giants has led the US stock market to eclipse those of other countries. Several of the largest US companies, such as Nvidia, Apple or Alphabet, now have individual valuations comparable to, or even higher than, the total capitalization of some national markets, such as the United Kingdom or Japan.
As a result, investors around the world have become accustomed to allocating a significant portion of their portfolio to the United States. For example, if they were to replicate a global index such as the MSCI World, around 70% of their equity exposure would be invested in US equities (as of the end of April 2026).
However, while the U.S. stock market is by far the largest in the world, it does not consistently offer the best performance.
The chart below illustrates the recent evolution of the US market, through its quarterly performance, compared to other markets.
Ups and downs: The U.S. stock market against other countries
Past performance is not indicative of future performance and may not be repeated.
Sources: MSCI and Schrders, as of March 31, 2026.
The analysis of the 35-year data provides a broader perspective, although fluctuations remain clearly visible. The heatmap below shows annual performance by size and region, with the best at the top of the table.
The United States, in blue, was in first place in 12 of the 35 years considered, but was last in 7 of those years. We can also see that they are in last place in the first quarter of 2026.
In the past 35 years, the United States has ranked last seven times
Past performance is not indicative of future performance and may not be repeated.
Europe = Europe excluding the UK. Sources: LSEG Datastream, MSCI and Schroders. Data as of March 31, 2026, in U.S. dollars.
The "American exceptionalism" observed for many years after the financial crisis may give the impression that this is a historical constant. Yet, the heat map shows that markets move in cycles. On several occasions, the US has lagged other equity markets, while emerging markets have often taken the lead. Going back even further, we can see that Japan dominated in the 1980s.
When a market outperforms for several years, its weighting within the indices increases. Investors are then disproportionately exposed to an implicit "bet" on the continuation of this outperformance. History has shown the risks associated with this type of extrapolation.
In this context, an active approach to investing in international equities allows you to go beyond the geographical distribution of an index, focusing on analysing the outlook specific to each sector and each company.
Learn more about our approach to active global equity management
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