Vanguard Says: International Stocks Could Beat the U.S. for Years

So acold successful 2026, the U.S. banal marketplace is delivering uninspiring results. The S&P 500 scale is fundamentally level twelvemonth to day (down 0.03%), portion the tech-heavy Nasdaq-100 scale is down 2.2%.

But if you look beyond the U.S., stock prices are growing. The Vanguard Total International Stock ETF (NASDAQ: VXUS), a money that includes thousands of stocks from companies successful planetary markets, is up 9% twelvemonth to date, outperforming some the S&P 500 scale and the Nasdaq-100 index.

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And the remainder of the world's stocks person outperformed some of those U.S. benchmarks successful the past year. The VXUS is up astir 31% successful the past year, compared to 12% for the S&P 500 scale and 11.7% for the Nasdaq-100.

This caller outperformance by planetary stocks mightiness not beryllium a fluke. It could beryllium a motion of sustainable strength. According to caller probe from Vanguard, different countries' stocks are apt to support beating America's for the foreseeable future. Let's look astatine wherefore planetary banal investing could beryllium savvy determination for 2026 and beyond.

Vanguard's 2026 economical and marketplace outlook projects 4.9%-6.9% mean yearly returns for the adjacent 10 years for "ex-U.S. equities" (international stocks extracurricular the U.S.). It lone projects 4%-5% of mean yearly returns for U.S. equities. If Vanguard's investigation is correct, planetary stocks are astir to bushed the U.S. by a important borderline for the adjacent decade.

This is simply a astonishing prediction. For astir of the past 16 years since the Great Financial Crisis, U.S. stocks person powerfully outperformed international. For example, ever since its inception successful January 2011, the Vanguard Total International Stock ETF has gained astir 67%, portion the S&P 500 scale is up astir 429% successful that timeframe.

The main crushed wherefore Vanguard is little bullish connected U.S. stocks is that its probe squad believes U.S. tech stocks are already priced for exceptionally precocious net expectations. Even if the artificial quality (AI) roar successfully delivers beardown productivity gains, bigger firm earnings, and roaring economical growth, America's AI stocks mightiness already beryllium pricing successful those blessed results. There mightiness not beryllium capable upside near successful U.S. tech stocks.

Instead of tech stocks, Vanguard sees amended risk/reward trade-offs successful high-quality U.S. bonds, U.S. worth stocks, and non-U.S. developed marketplace equities (international stocks successful countries with immoderate of the astir advanced, prosperous economies, similar Japan, Canada and Europe).