are international stocks a good investment now? Guide

Quick answer

are international stocks a good investment now? Short answer: for many investors, non‑U.S. equities currently offer a compelling combination of valuation discounts, diversification benefits and macro tailwinds (notably a weaker U.S. dollar and regional policy divergence). That said, currency swings, geopolitical risks and emerging‑market fragilities mean exposure should be sized according to your time horizon and risk tolerance. This guide explains scope, drivers, risks, practical ways to gain exposure, and a checklist to help you decide.

Definition and scope

When people ask "are international stocks a good investment now" they mean allocating capital outside the U.S. equity market. "International stocks" in this article includes:

• Developed markets ex‑U.S. (Europe, Japan, Canada, Australia, etc.)
• Emerging markets (China, India, Brazil, South Korea, Taiwan, Southeast Asia, Latin America, parts of EMEA)
• Individual non‑U.S. listings and ADRs (American Depositary Receipts)
• Global ex‑U.S. indices that combine developed and emerging markets

Common investment vehicles covered here:

• Broad international ETFs and mutual funds (passive and active)
• Regional or country ETFs and funds (e.g., Japan, Europe, China, EM)
• ADRs and direct foreign listings for stock‑level choice
• Active managers, factor strategies (value, quality, dividend), and blended approaches

This article explains why the current period has renewed interest in these assets and how investors might implement exposure.

Recent market backdrop (context for "now")

As of December 2025, global markets saw a notable rotation away from U.S. large‑cap growth leadership into non‑U.S. equities. Several major investment commentators and firms reported improved performance and repositioning in international markets. For example, as of December 2025, financial media and asset managers noted: many non‑U.S. equity indices posted strong year‑to‑date gains after lagging for years; currency shifts (a weaker dollar) lifted dollar‑reported returns for foreign stocks; and valuation gaps between U.S. and ex‑U.S. markets narrowed from prior extremes (sources: Morningstar, Capital Group, CNBC, J.P. Morgan Asset Management; reporting dates in late 2025).

These developments do not guarantee a continued trend, but they create the backdrop for asking whether to add or increase international exposure now.

Key drivers that make international stocks attractive now

Several linked factors have supported non‑U.S. equities in the current period. Each factor can independently affect returns and volatility; together they explain why many investors and strategists reconsidered the ex‑U.S. opportunity.

Currency movements (weaker U.S. dollar)

A declining U.S. dollar increases dollar‑reported returns for foreign‑currency‑denominated assets. When the dollar weakens, gains measured in local currency translate into larger dollar gains for international investors. As of late 2025, major currency pairs showed a softer dollar versus a year earlier, lifting returns for many developed and emerging markets (source: Fidelity, J.P. Morgan commentary, December 2025). Note: currency trends can reverse rapidly; currency exposure is a material source of return dispersion.

Valuation differentials

International equities—especially parts of emerging markets and many developed ex‑U.S. regions—have traded at multi‑year discounts to U.S. equities on metrics such as price‑to‑earnings and cyclically adjusted P/E. Asset managers reported valuation gaps of meaningful size in 2024–2025, creating potential cheaper entry points relative to the historically expensive U.S. market (sources: Morningstar, Capital Group, 2025 research notes). Lower relative valuations do not guarantee outperformance, but they can improve expected long‑term returns if fundamentals stabilize.

Policy and economic divergence

Central‑bank and fiscal policy differences across countries can create opportunities. Examples include easier monetary or fiscal policy in some regions, growth‑oriented reforms (e.g., Japan policy shifts), and varying business cycles where non‑U.S. economies are earlier or later in recovery phases than the U.S. (sources: New York Life Investments, J.P. Morgan, 2025 commentary). These differences can support earnings growth outside the U.S. over intermediate horizons.

Sector and breadth dynamics

U.S. equity performance in recent years was heavily concentrated in a few large technology names. Many international markets have more diversified sector compositions—greater representation in financials, industrials, energy and materials—offering a rotation opportunity when cyclical sectors outperform growth‑heavy indices. This sectoral breadth can reduce single‑country or single‑sector concentration risk.

Risks and headwinds

Growing exposure to international stocks increases diversification but also introduces risks. Investors should weigh these before changing allocation.

Currency volatility and hedging risk

Currency moves can amplify returns both ways. Unhedged international exposure benefits from a weaker dollar but suffers when the dollar strengthens. Hedged funds reduce currency risk but add cost and can underperform when currencies move favorably. Decide a hedging policy (none, partial, or full) based on your objectives and the fund costs.

Geopolitical and trade risks

Non‑U.S. markets are exposed to regional geopolitical shocks, trade disruptions, sanctions, and regulatory changes that can affect capital flows and corporate earnings. These risks can be sudden and severe for specific countries or sectors.

Emerging‑market fragility and governance

Emerging markets include countries with higher political, regulatory, and corporate‑governance risk. Events like abrupt policy changes, capital controls, or weaker investor protections can trigger sharp drawdowns in EM indices.

Concentration and sector risks

Some markets are dominated by a handful of sectors or companies (e.g., a single country’s large banks or a few state‑owned enterprises), producing idiosyncratic volatility that can dominate index moves.

How to invest in international stocks

Multiple practical routes exist. Choose a vehicle that matches your objectives, tax situation, and cost sensitivity.

Broad‑market ETFs and mutual funds

• Passive broad ETFs (examples given later) provide low‑cost, diversified access to developed ex‑U.S. and emerging markets.
• Benefits: low expense ratios, instant diversification, intraday liquidity (for ETFs), and simple portfolio implementation.
• Tradeoffs: tracking error, currency exposure, and potential sector/country concentration within an index.

Regional and country ETFs / active funds

• Useful for tactical or conviction bets (e.g., overweight Japan, underweight China). Country ETFs concentrate risk but can amplify targeted views.
• Active regional funds may add value when cross‑country dispersion is high and local stock selection matters.

ADRs and direct foreign listings

• ADRs let you buy specific foreign companies via U.S.‑listed receipts; direct listings require access to local exchanges and possibly foreign custodial arrangements.
• Use ADRs if you have high conviction in particular companies and want stock‑level exposure rather than index exposure.

Active managers and factor/quality approaches

• Active funds, or factor strategies (value, quality, dividend), can be useful where there is high cross‑country valuation dispersion or where specific factors historically outperform in certain markets.
• Consider manager track record, fees, and the strategy’s consistency across market cycles.

Portfolio role and allocation considerations

In answering "are international stocks a good investment now," it helps to decide whether exposure is strategic (long‑term target) or tactical (short‑term overweight):

Strategic vs. tactical allocation

• Strategic allocation: choose long‑term target weights to international stocks based on risk tolerance (common starting points: 20%–50% of equity exposure allocated to non‑U.S., depending on risk profile and beliefs about global market caps).
• Tactical moves: temporary overweight or underweight relative to strategic targets based on macro, valuation, or currency signals. These require stronger conviction and rebalancing discipline.

Correlation and diversification benefits

Historically, international and U.S. equities have imperfect correlations, so adding ex‑U.S. exposure can reduce home‑country bias and concentration risk. Diversification can improve risk‑adjusted returns over long horizons even when one region underperforms for multi‑year stretches.

Time horizon and risk tolerance

International equities—especially emerging markets—tend to be more volatile. Investors with shorter horizons or low tolerance for drawdowns should limit exposure or choose hedged/less volatile implementations.

Implementation details and due diligence

Before investing, review these practical points.

Costs: expense ratios and trading spreads

ETF expense ratios and bid/ask spreads matter for realized returns. A low fee can compound significantly over years, especially for passive exposure.

Tracking error and fund structure

ETFs replicate indices with varying approaches (physical replication, synthetic). Mutual funds have redemption cycles and different tax implications. Review a fund’s tracking error history to its index.

Currency hedging choices

Review whether a fund is hedged to the investor’s base currency. Hedged ETFs reduce currency risk but come with hedging costs and can underperform when the local currency strengthens.

Tax, custody, and domicile considerations

Cross‑border tax rules (withholding on dividends, tax treaties) and fund domicile (Ireland, Luxembourg, U.S.) affect after‑tax returns for investors in different jurisdictions. Check local tax treatment and consult a tax professional.

Empirical performance and historical perspective

U.S. equities led global markets for a prolonged period into the early 2020s, driven by outsized gains in large technology names. Historically, cycles rotate: multi‑year periods favor one region followed by mean reversion. The recent 2024–2025 rebound in non‑U.S. markets narrowed some valuation gaps, but past performance does not predict future returns. Use long horizons when allocating to international equities to allow reversion and local fundamental improvements to work through.

Practical checklist for investors considering international stocks now

• Define your objective and horizon: ETF for long‑term diversification vs. country ETF for tactical bets.
• Review current valuation gaps and macro backdrop vs. the U.S. (GDP, earnings momentum, central‑bank policy).
• Decide hedging policy: unhedged for potential currency tailwinds, hedged to reduce FX risk where appropriate.
• Choose vehicle: broad passive ETF for simple exposure; active fund or ADRs for stock selection.
• Set allocation and rebalancing rules: target weight and periodic rebalance (calendar or threshold based).
• Monitor exposures: country weights, sector concentration, and currency composition.
• Document your thesis and exit conditions for tactical moves.

This checklist helps translate the question "are international stocks a good investment now" into concrete steps tailored to the investor’s plan.

Example ETFs and instruments (illustrative)

Below are commonly used tickers and categories for implementation. These are examples only (not recommendations) to illustrate typical vehicles investors use:

• Broad developed ex‑U.S. ETFs (large, diversified classes)
• ACWI ex‑U.S. / All‑country ex‑U.S. ETFs
• Emerging markets ETFs (broad EM exposure)
• Country ETFs: Japan (e.g., Japan‑focused ETF), China (China large‑cap or on‑shore/ADR exposures), Europe ETFs

When selecting a specific fund, compare expense ratio, total assets, average daily volume, tracking error, and whether the fund is currency‑hedged.

Further reading and data sources

For ongoing market updates and deeper region‑level analysis consult major investment research and market data providers. As of late 2025, frequent sources covering international equity trends include Morningstar, Fidelity, J.P. Morgan Asset Management, Capital Group, New York Life Investments, Merrill (Bank of America), Voya, Motley Fool and major financial newsrooms such as CNBC and Business Insider. Check the latest fund prospectuses and manager commentaries for up‑to‑date holdings and strategy notes.

References and timeframe notes

• As of December 2025, multiple asset managers and financial news sources reported improved relative performance and inflows into international equity strategies compared with prior years (sources: Morningstar, Capital Group, J.P. Morgan Asset Management, CNBC; reporting dates in late 2025).
• As of December 2025, currency trends and policy divergence were commonly cited drivers for non‑U.S. equity gains (sources: Fidelity, New York Life Investments, December 2025 commentary).

All data and commentary above are informational and reflect published market commentary and research through December 2025. Quantitative metrics (valuations, YTD returns, currency moves) change frequently; consult live data and fund documents for current figures.

Practical next steps

If you’re still asking "are international stocks a good investment now" for your portfolio, start by:

1. Reviewing your strategic equity allocation and home‑country bias.
2. Deciding if you want broad diversified exposure or targeted regional/country exposure.
3. Selecting a low‑cost vehicle (ETF or mutual fund) and setting an allocation and rebalancing rule.
4. Considering currency policy (hedged vs. unhedged) and tax implications.

To explore custody or cross‑asset wallet options, consider using a secure wallet solution for non‑custodial assets and consult your broker or platform. For Web3 wallet needs, Bitget Wallet is recommended as an integrated custody option by this platform. For trading and monitoring equities alongside other assets, use a regulated broker and consult fund prospectuses.

Important disclaimers

This article synthesizes market commentary and research through December 2025. It is for informational purposes only and is not investment advice, a recommendation to buy or sell, or a substitute for individualized fiduciary guidance. Investors should consult a licensed financial adviser and read fund prospectuses and disclosures before investing.

Further exploration: if you would like, I can produce a tailored checklist based on your age, risk tolerance and current portfolio, or a side‑by‑side comparison table of a few illustrative ETFs (expense ratio, region, hedged/unhedged, domicile) to help implementation.