European markets likely to underperform U.S. stocks

Many investors are reconsidering their investments in U.S. stocks, especially in light of the trade war. Some have even sold off their U.S. stock positions. Instead, they are looking to Europe for potential gains. However, European stock markets have not performed as well as U.S. stocks over the past decade. They have also underperformed compared to Canadian markets. For example, a popular European ETF saw a return of just 18.2 percent in the last year. In contrast, a Canadian ETF returned 23.3 percent during the same period. U.S. stocks showed even higher returns, with one ETF reporting a 12-month gain of 26.1 percent. Investors often consider international funds to diversify outside North America. Yet, these international stocks have struggled as well. Another ETF tracking international markets returned 13.8 percent over the past year, which is still lower compared to the U.S. or Canadian options. While U.S. stocks have excelled in the last ten years, there are concerns about a potential market pullback. Despite this, they have a proven history of boosting portfolio returns. European stocks are an option, but they have not demonstrated the ability to keep pace with U.S. stocks. Investors should be cautious if they seek high returns from European markets.