International stocks are ahead of the U.S. so far this year—how to add them to your portfolio

In recent years, the United States has been a popular choice for investors. The S&P 500, a key indicator of the U.S. stock market, has provided an annualized return of 14.2% over the past fifteen years. Comparatively, the MSCI ACWI ex-USA index, representing stocks from around the globe, has recorded a return of 6.5% during the same period. However, since the beginning of 2025, investors have been turning away from U.S. stocks in favor of international options. This year, the ACWI ex-USA index has outperformed, delivering a return of 15.7% compared to the S&P’s 1.5%.

David Rosenstrock, a certified financial planner at Wharton Wealth Planning, notes a growing trend among investors in 2025 to look beyond U.S. markets, citing concerns over volatility, policy uncertainties, and weaker performance. Financial experts suggest that while short-term results should not trigger drastic portfolio changes, diversifying with foreign stocks can be a smart move for long-term investment success.

Although U.S. stocks have been dominant for a while, historical trends show that foreign stocks have had periods of outperformance. Adding foreign stocks to your investment mix can provide exposure to various economic cycles and industries, reducing risks associated with U.S.-specific factors. Utilizing low-cost index mutual funds or exchange-traded funds to invest in international markets is recommended for broad diversification.

Market analysts recommend owning a “total international stock” fund to gain exposure to both developed and emerging markets outside the U.S. While it may be tempting to focus on a specific country or region, diversifying across different markets is crucial to avoid portfolio volatility. By investing in foreign stocks, investors can tap into unique growth opportunities and mitigate risks associated with concentrating investments in a single market.

If you are considering investing in international stocks, experts advise caution against overly concentrating on a particular region due to potential volatility and timing risks. Instead, a diversified approach across different markets can help balance risks and returns in your investment portfolio.