Investing in the stock market can be a thrilling experience, especially when you’re consistently beating the market average. However, for those who have stuck to U.S. stocks throughout the year, it’s time to take a step back and reassess their portfolio. The reason: non-U.S. stock markets have been making waves this year, and investors are taking notice.
Warren Buffett, one of the most renowned investors of our time, is no stranger to diversification. In fact, his investment firm, Berkshire Hathaway, has a significant portion of its portfolio allocated to international investments. And this year, it seems like a growing number of investors are following in Buffett’s footsteps.
According to a recent analysis, investing in certain non-U.S. stock markets would have yielded significantly higher returns this year compared to investing in U.S. stocks. This trend has sparked interest among investors, leading them to explore alternative investment options. One such option that’s gaining traction is investing in Exchange-Traded Funds (ETFs) that track non-U.S. stock markets.
So, what’s driving this shift in investor sentiment? And which non-U.S. stock markets are worth considering?
A Look at the Data
Before we dive into the world of non-U.S. stocks, let’s take a look at the data. According to a recent report, the MSCI EAFE Index, which tracks the performance of developed markets outside the U.S. and Canada, has outperformed the S&P 500 Index this year. The same report points to the MSCI Emerging Markets Index, which tracks the performance of emerging markets, as another area of growth.
Why Non-U.S. Stocks Are Attracting Attention
So, why are investors flocking to non-U.S. stocks? There are several reasons for this shift in sentiment:
- Diversification: By investing in non-U.S. stocks, investors can reduce their portfolio’s exposure to U.S. market fluctuations, potentially leading to a more stable investment experience.
- Growth opportunities: Emerging markets, in particular, offer a wealth of growth opportunities, driven by increasing consumer demand and urbanization.
- Valuations: Certain non-U.S. stocks are trading at attractive valuations, making them a compelling addition to a diversified portfolio.
ETFs for Non-U.S. Stocks
So, how can investors tap into the growth opportunities presented by non-U.S. stocks? One option is to invest in ETFs that track these markets. Here are some popular ETFs worth considering:
- Vanguard FTSE Developed Markets ETF (VEA)
- iShares MSCI EAFE ETF (EFA)
- VanEck Vectors Emerging Markets ETF (VEIEX)
These ETFs offer a convenient way to gain exposure to non-U.S. stocks, with low fees and a wide range of investment options.
What to Watch Next
As the investment landscape continues to evolve, it’s essential to stay informed about the latest trends and developments. Here are some key takeaways to watch in the coming months:
- Trade tensions: The ongoing trade tensions between the U.S. and China may have a significant impact on non-U.S. stocks, particularly those with exposure to emerging markets.
- Economic growth: The growth prospects of emerging markets, such as India and Indonesia, are expected to remain strong in the coming years, making them an attractive area of investment.
Conclusion
In conclusion, investing in non-U.S. stocks is an attractive option for investors looking to diversify their portfolio and tap into growth opportunities. By following in Warren Buffett’s footsteps and exploring ETFs that track non-U.S. stock markets, investors can potentially add a new dimension to their investment strategy. Whether you’re a seasoned investor or just starting out, it’s essential to stay informed about the latest trends and developments in the investment world.
