Dan Sotiroff, a passive strategies research analyst for Morningstar, has written an insightful article about foreign stock funds with these observations and suggestions:
Are You Questioning Your Foreign Stock Funds?"They've (foreign stocks) underperformed by around 6%-7% in aggregate. That's sort of just a continuing story of what we've seen over the past 10, 11 years. Foreign stocks have generally lagged their U.S. counterparts pretty broadly."
"In the U.S. we've got the Microsofts, the Apples, the Netflix that have had really strong performance over the past decade. They're U.S. companies, they don't exist overseas, so that's been a big part of the gap between the U.S. and foreign markets."
"Value stocks have just gotten trounced, and growth has actually held up pretty well, and the performance from overseas growth stocks has actually been comparable to the U.S. market."
"The other thing with small caps is they tend to have a lot more exposure to things like energy and materials. So, those sorts of sector plays tend not to be great, especially when you go through sort of this energy drawdown that we saw coinciding with the coronavirus sell-off. So, they've had a tough go of it over the past six months and really over the last few years, as well."
"It's been a very, very long slug of just underperforming the U.S. market. It's difficult to justify, understandably, but I always remember that markets can't go one direction forever."
"Myself, I'm just following a strict rebalancing strategy. Like we say every time we sit down for these videos, I'm going to be buying more foreign stock when I go to rebalance my portfolio. Over the long run, the next 20, 30 years, whatever your time horizon is, I think that's going to be a pretty good strategy. It's worked out historically, and I'm very confident that it's going to continue to work out very well in the long-term future."
Four years ago I wrote my own thought about International stocks Here.
Jack Bogle's Words of Wisdom: "I'm just a great believer in a U.S. portfolio because we're the most entrepreneurial nation, we've got the soundest institutions, financial and otherwise, or have had in the past, governance is pretty solid, in the past at least, and a well-diversified economy. For U.S. corporations, about half of their revenues and half of their earnings come from abroad anyway."