Using official MSCI World ex USA (gross) and S&P 500 price returns, ex-US beat US by ~16 pts in 2025.
Largest ex-US outperformance spread since 2008.
Leadership rotation or dollar effect?
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Using official MSCI World ex USA (gross) and S&P 500 price returns, ex-US beat US by ~16 pts in 2025.
Largest ex-US outperformance spread since 2008.
Leadership rotation or dollar effect?
I don't follow this kind of stuff closely.
A 17% annual return is unusually high, right?
Don't international stocks normally have higher average returns than US to offset carrying more risk?
Most likely 2025 reflected a weaker dollar. It wasn’t “international has higher expected returns,” it was weaker USD + valuation/sector mean-reversion away from big US tech + better regional tailwinds lining up in the same year.
Other things equal, a weaker (weakening) dollar would correspond to higher prices.
That makes me suspect some of the dollar's weakness is coming from relatively low interest in buying US stocks.
The main drivers were Fed cut expectations/yield spreads plus tariff/trade-policy volatility and confidence effects (incl. Fed-independence rhetoric). That mix helped push the dollar toward its steepest annual drop since 2017
I get it, but that means those factors are driving both the weak currency and the weaker stock market, rather than the weak currency driving the weak stock market.
I hear you. Causality isn’t ‘USD down → US stocks down.’ It’s shared drivers. Still, USD down → foreign assets up (in USD terms), so relative performance can favor ex-US.