Why have US stocks beaten international stocks since 2010?

Amerikanska aktier har överglänst sina icke-amerikanska motsvarigheter med stor marginal efter den globala finanskrisen 2007-2009. Från början av 2010 till december 2022 steg Morningstars amerikanska marknadsindex med 12 procent på årsbasis.

US stocks have outperformed their non-US counterparts by a wide margin since the global financial crisis of 2007-2009. From early 2010 to December 2022, Morningstar’s U.S. market index rose 12 percent on an annualized basis.

Compare that to the Morningstar Global ex-U.S. Index, which has only returned 4.4%.

What has driven the overperformance?

1) Currency movements: The US dollar appreciated a cumulative 33% against a broad basket of foreign currencies (reducing the return on non-US assets denominated in USD).

2) Stock-specific factors: Some of the largest US companies have had superior returns from 2010-2022:

Microsoft: +893 percent

Amazon: +669 percent

Netflix: +2768 percent

Apple: +705 percent

3) Better fundamentals: US corporate revenues have grown annually by 6 percent, almost triple the pace of emerging markets.

And no, the difference is not only due to Big Tech.

While US indices lean more towards technology, healthcare and financial services – stocks in ALL (!) sectors have outperformed their foreign counterparts.

That said, US stocks are richly valued today – and much more so at their peak. And 40% of S&P 500 companies’ revenues come from abroad.

So looking ahead – will the rebound lead to international stocks reclaiming their time in the sun?

Time will tell.

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