Non-U.S. and International Stocks Look Ripe for Solid Returns on Weaker Dollar
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2022 was the first year since 2016 that value investing thoroughly trounced growth investing.
S&P 500 Annualized Returns
Click on the above table and you can see the progression between growth and value amongst the large-cap, mid-cap and small-cap asset classes.
It should be no surprise to readers: growth had a nice spurt off the lows in June and October ’22 but the higher 10-year Treasury yield is acting like a wet blanket for growth stocks.
Don’t ignore the annual return or “annualized” data found in the bottom left-hand corner of the spreadsheet. Longer-term large-cap growth returns still look too high, although the 3-year return is now more normal so to speak. The mega-cap and large-cap names
Non-U.S. Ripe for a Continued Drop in the Dollar:
Looking at annual return data, there is no question that non-US and International look ripe for some robust returns, particularly looking at the 10-year and 15-year annual returns.
International Annual Returns
But what’s the catalyst? Maybe a weaker dollar.
The last time non-US did really well for an extended period was the decade from 2000 to 2009 when large-cap growth imploded with March 2000, peak.
Maybe the negative returns this year in the Non-US asset class (the tickers listed above are non-US and international ETFs including international mutual funds) can’t be faulted given Ukraine and China’s issues, but China is supposedly set to begin re-opening and Ukraine may be a non-issue moving forward if it remains in stalemate.
This isn’t a prediction but I continue to think that non-US investing opportunities, meaning international and emerging markets, have a compelling risk/reward when looking at the 10 and 15-year annual returns.
This blog is just waiting for a stronger signal to allocate more funds to Non-Us investments, like the (Oakmark International Fund Investor Class) or the iShares MSCI Emerging Markets ex China (NASDAQ:EMXC).
