International stock funds outperform U.S. equities recently

International equity investors have faced challenges since the global financial crisis. For a decade ending in December 2024, U.S. stocks greatly outperformed international stocks. The U.S. market saw a 12% annual gain, while global markets outside the U.S. only gained 5%. In early 2025, however, the situation changed. As of mid-March, U.S. stocks had dropped by 4.3%, while non-U.S. stocks increased by 6.8%. This shift has been one of the most significant changes in the past decade. Funds focusing on international stocks have performed better compared to those heavily invested in the U.S. Some funds were prepared for this shift. For example, Artisan Global Equity had only 34% of its assets in U.S. stocks, leading to a 10.2% gain so far in 2025. Strong performers like Hanwha Aerospace in South Korea contributed to this success. Other funds with less U.S. exposure also fared well. Conversely, some funds were caught off guard. The AB Disruptors ETF saw a decline of 6.5%, primarily due to poor U.S. stock performance. Other funds, like PGIM Jennison Global Opportunities, had similar challenges due to their investments in underperforming American tech companies. Not all funds followed the trend. American Century Focused Global Growth, with 71% in U.S. stocks, managed a 1.4% gain thanks to strong performances from certain holdings like Meta Platforms. Meanwhile, Baron Global Advantage struggled despite having a lower U.S. exposure. Looking at emerging markets, the Morningstar Emerging Markets Index climbed by 2.5%, yet it lagged behind developed markets, particularly due to India's poor stock performance. While some funds with less investment in India thrived, others that were more heavily invested struggled. This recent turnaround in international stocks highlights the importance of a diversified portfolio. Investors should remain aware that market conditions can change rapidly and being prepared can help them seize potential opportunities.