{"id":3540,"date":"2016-10-25T16:16:37","date_gmt":"2016-10-25T20:16:37","guid":{"rendered":"http:\/\/162.223.13.186\/~zacksim\/emerging-markets-outperform-u-s-stocks\/"},"modified":"2022-02-26T13:20:50","modified_gmt":"2022-02-26T13:20:50","slug":"emerging-markets-outperform-u-s-stocks","status":"publish","type":"post","link":"https:\/\/zacksim.com\/blog\/emerging-markets-outperform-u-s-stocks\/","title":{"rendered":"Emerging Markets Outperform U.S. Stocks"},"content":{"rendered":"<p><strong>Phil M from Boston, MA asks: <\/strong><em>Mitch, I noticed last quarter that Emerging Markets and countries outside the U.S. performed much better than U.S. stocks. Is this the start of a new trend, or just an\u00a0anomaly?<\/em><\/p>\n<p>Thank you for your question, Phil<em>.<\/em> Your question shows that you follow the equities markets closely, because you\u2019re absolutely right \u2013 foreign outperformed domestic (U.S.) in most categories last quarter, and Emerging Markets are notably having a solid year.<\/p>\n<p>Though there is no black and white explanation for why foreign outperformed, you could point to a few factors that may have helped such as Brexit fears fading, more accommodative monetary policies from the European Central Bank, and better-than-expected economic data from China. You might say it was a fading of negatives that boosted foreign stocks, versus an emergence of new positives.<\/p>\n<p>Here\u2019s a by the numbers look at equities markets last quarter:<\/p>\n<ul>\n<li>MSCI World ex USA: +6.91%<\/li>\n<li>MSCI EAFE: +6.43%<\/li>\n<li>MSCI Emerging Markets: +9.03%<\/li>\n<li>S&amp;P 500: +3.85%<\/li>\n<\/ul>\n<p>It\u2019s clear to see the outperformance, but your question is: <em>will it last? <\/em>A cyclical argument would say that there\u2019s a good shot it will, if you take a look at the longer term. History tells us that leadership changes hands over time \u2013 the U.S. may outperform for a period, but then in the next cycle it could lag. That\u2019s what we\u2019ve seen over the last two cycles. Foreign and Emerging Markets outperformed the U.S. during the 2002 \u2013 2007 bull market, but then opposite has been true in this bull market. It\u2019s a valid argument to forecast that foreign will outperform again.<\/p>\n<p>I\u2019m just not convinced that foreign will regain leadership for the balance of this economic expansion. High debt loads in Emerging Markets along with the commodities resetting will affect growth rates there, and negative interest rate policy in Europe and Japan aren\u2019t likely to reaccelerate growth from here. The U.S. is leading the world.<\/p>\n<p>For investors, the approach should be to build a diversified portfolio that has an overweight to the U.S. but some exposure to foreign, depending on your risk tolerance. That way when we see performance from foreign like we did in Q3, you can participate in the gains.<\/p>\n<p>At Zacks Investment Management, we work to build portfolios that meet the individual\u00a0needs of our customers. If you would like to learn about our top performing strategies and see how they could benefit you, I invite you to download our\u00a0Dean\u2019s List of Investment Strategies. To learn more click on the link below:<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Phil M from Boston, MA asks: Mitch, I noticed last quarter that Emerging Markets and countries outside the U.S. performed [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":4257,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[66,67,71],"tags":[],"class_list":["post-3540","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-mitchs-mailbox","category-offer-deans-list","category-private-client-group"],"acf":[],"_links":{"self":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/3540","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/comments?post=3540"}],"version-history":[{"count":1,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/3540\/revisions"}],"predecessor-version":[{"id":11150,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/3540\/revisions\/11150"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/"}],"wp:attachment":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/media?parent=3540"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/categories?post=3540"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/tags?post=3540"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}