In light of the strong performance from U.S. stocks over the past five years, it’s reasonable for an investor to ask “Why international stocks now?”. We are convinced that the reasons for investing internationally are even more compelling today than they were twenty years ago. Permit us to illustrate the most significant reasons for investing internationally today.
The Opportunity Set is Dramatically Larger
As of the end of 2013 over 60% of the weight of the world stock market capitalization consisted of non-U.S. companies. Investing has become a more global activity over the past twenty years, with many more investment opportunities becoming apparent in both developed and developing countries. The largest companies in many industries are in fact internationally based rather than U.S. based. For example, of the 15 largest banks in the world, 13 are outside the U.S. Other industries dominated by non-U.S. firms include Metals and Mining (13 of top 15), Airlines (12 of top 15), Automobiles (12 of top 15), Diversified Telecommunication Services (12 of top 15) and Pharmaceuticals (9 of top 15).
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