International Investing Statistics (2026)

There is a lot more stock market outside the US than most American investors picture. In the MSCI All Country World Index, the US is about 63.6% of global equity value and everything else, developed and emerging combined, is the remaining roughly 36% (see the table below).

The index spans about 2,461 companies across 47 countries and captures roughly 85% of global free-float market cap. After the US, the biggest single countries are Japan (about 5.0%), Taiwan (about 3.3%), the UK (about 3.5%), and France (about 2.9%).

US dominance of global indexes is a recent, and extreme, development. In 1988 the US was under 30% of global equities; by 2010 it was about 42%, and by mid-2026 it had climbed to roughly 64%, near record highs (see the chart and table below).

That near-doubling reflects a decade-plus of US stocks outrunning the rest of the world, not a fixed law of nature. When US and foreign returns converge or reverse, the US weight in global indexes falls with it, as it did through the 2000s.

Investors everywhere overweight their own country, and Americans are no exception. US investors hold roughly 80% of their equity wealth in US stocks even though the US is only about 64% of global market cap, and the IMF measure of US home bias eased only slightly from 83% to 81% into 2023 (see the table below).

Home bias is not automatically wrong, but the size of the tilt matters. An investor at 80% US is meaningfully more concentrated than the global market, which is why target-date funds deliberately set a lower, rules-based international weight rather than following investor behavior.

The strongest case for owning international is not a return forecast, it is diversification. Vanguard's research finds that raising the international share of an equity portfolio to 30-40% captures more than 95% of the volatility-reduction benefit of full market-cap diversification.

That is why Vanguard target-date and balanced funds hold about 40% of stocks internationally, below the roughly 36% pure market-cap weight in some years but far above the typical investor's tilt. Most of the benefit accrues as the allocation climbs from 0% to about 20%.

For most of the past 10-15 years, staying home paid off handsomely. US stocks returned about 13.1% a year over the past decade versus about 4.9% for developed international and 5.3% for emerging markets, and from mid-2008 to end-2024 the S&P 500 compounded 11.9% a year against just 3.6% for the EAFE index (see the chart and table below).

A gap that wide compounds into a chasm: a dollar in the US market grew several times faster than the same dollar abroad. This stretch is the reason a generation of investors came to see international as dead weight.

The outperformance was earned, not accidental. Over the decade the S&P 500 grew earnings about four times faster than EAFE, roughly 6.3% a year versus 1.6%, powered by a tech-heavy index that leaned into the sectors with the strongest secular growth.

On top of faster earnings came a bigger re-rating: the S&P 500's price-to-earnings multiple expanded from about 12.8x to 21.7x, while EAFE went only from about 11.3x to 14.0x. Faster growth plus more multiple expansion is most of the story.

It has not always been this way, and the reversal can be brutal. From the end of 1999 through 2009 the S&P 500 lost about 0.9% a year, its worst 10-year stretch since the 1930s, while international stocks and especially emerging markets delivered solidly positive returns.

An investor who had abandoned international at the start of that decade would have sat through 10 years of going nowhere in US stocks. Leadership rotates, and the periods when it rotates tend to be exactly when home bias hurts most.

2025 was a textbook rotation. Developed international (MSCI EAFE) returned about 32% and emerging markets about 34%, while the S&P 500 gained about 18%, its largest calendar-year lag behind foreign stocks in years (see the chart below).

A big driver was currency: the US dollar index fell more than 9% in 2025, its worst year in nearly a decade, which mechanically boosts foreign returns for a dollar-based investor. Faster growth in parts of Asia and Europe and a broadening AI trade did the rest.

Zoom out and US-versus-international leadership looks like a pendulum, not a trend. Vanguard notes the US actually underperformed international in three of the last five decades (the 1970s, 1980s, and 2000s), even though the most recent stretch was a decisive US win.

The practical lesson is that the winner of the last decade is a poor guide to the next. Owning both sides of the cycle, rather than chasing whichever just won, is what a global allocation is designed to do.

Part of the international case rests on price. Entering 2026 the S&P 500 sat among the most expensive markets on a cyclically adjusted P/E basis, with a global CAPE near 27.7, while developed-international and emerging markets traded at lower multiples (see the table below).

The income gap is just as stark: the S&P 500 yielded only about 1.07% in mid-2026, versus roughly 2.9% for developed international and about 2.0% for emerging markets, because foreign companies tend to pay out more of earnings as dividends rather than buybacks.

Owning foreign stocks means owning foreign currencies, and that cuts both ways. International tends to beat the US when the dollar falls, because foreign returns translate into more dollars, and to lag when the dollar rises, as it largely did during the 2010s US bull run.

In 2025 a greater-than-9% drop in the dollar index turbo-charged foreign returns for US investors. Currency adds volatility in the short run, but over long horizons it is another uncorrelated source of return rather than a reason to avoid international.

Skeptics note that US and international correlations have risen with globalization, which trims the diversification benefit. That is true, but the correlation is still well below 1.0, so foreign stocks do not move in perfect lockstep with US stocks and continue to smooth portfolio volatility.

The nuance matters by segment: developed markets are highly correlated with the US and diversify less, while emerging markets have historically been the better diversifier and paid a risk premium. Imperfect correlation is likely to persist, so the benefit is smaller than it once was but real.

Forward-looking models now favor international, largely because of the valuation gap. Vanguard's 2026 outlook projects US equities to return about 4.3% a year over the next decade (a 4-5% range) versus about 6.1% for international (a 5-7% range), and estimates international outperforms in about seven of every ten simulations (see the table below).

These are model projections, not promises, and the ranges are wide for good reason. But the direction, cheaper starting valuations abroad implying higher expected returns, is consistent across most major forecasters.

The evidence points to a simple discipline: own international, size it deliberately, and rebalance rather than chase. A 30-40% international equity weight captures most of the diversification benefit while keeping the allocation practical, and it hedges the risk that the next decade looks like the 2000s rather than the 2010s.

The hardest part is behavioral. International lagged for so long that many investors gave up right before the 2025 reversal, the classic mistake of extrapolating the recent past. A rules-based global mix, held through the cycle, is what turns diversification from a slogan into realized return.