Is This the Long-Awaited Comeback for International-Stock Funds?

The era after the global financial crisis has not been kind to international-equity investors. Over the decade through December 2024, the Morningstar US Market Index’s 12% annualized gain trounced the Morningstar Global Markets ex-US Index’s 5%.

Since the beginning of 2025, though, the tides have started to turn. While it’s a short period, the performance discrepancy has been dramatic. Through March 16, 2025, the US benchmark fell 4.3%, while the global ex-US index rose 6.8%.

While non-US stocks have outperformed before, such as in late 2022 and early 2023, this reversal has been among the sharpest over the past decade.

The trend’s impact is obvious in various global Morningstar Categories. Indeed, while investors should expect international funds to do better when international stocks are in favor, global funds have more latitude to invest across the world, so arguably, active managers should have been able to see the rebound coming and position their portfolios accordingly. Some did. On average, funds with more international-stock exposure and less in the US, have fared better than their peers in 2025. Simply knowing a portfolio’s allocation to the US was a strong predictor of its performance.

Funds That Were Ready for the Shift

Artisan Global Equity ARTHX was among the funds that benefited the most from US stocks’ underperformance. As of December 2024, the portfolio had 34% of its assets parked in US stocks, which was among the lowest in the global large-stock growth category. The fund’s 10.2% gain since the start of 2025 through March 16 was also among the best in the category. South Korea-based holdings such as Hanwha Aerospace and LIG Nex1 gained more than 110% and 25%, respectively, over the brief period.

Sequoia’s SEQUX 5.1% gain was also among the best in its category. It had 55% of its December 2024 portfolio’s assets in US stocks. UK-based Rolls-Royce was the top contributor over the period; it soaked up nearly 9% of the portfolio’s assets and gained more than 40%. SAP was another top contributor.

Funds That Were Caught Off Guard

AB Disruptors ETF FWD owned a few international companies such as Rolls-Royce and Alibaba BABA that performed well, but it wasn’t enough to overcome its US stock picks. Holdings such as Marvell Technology MRVL, Tesla TSLA, and Coherent COHR were all down more than 30% in 2025 through March 16, which weighed on performance. The fund declined 6.5% over the period.

PGIM Jennison Global Opportunities’ PRJZX 8.4% decline was among the steepest in the global large-stock growth category. A smattering of US-based semiconductor companies such as Nvidia NVDA and Broadcom AVGO fell more than 9% each. US tech holdings The Trade Desk TTD and Arista Networks ANET fell 54% and 24%, respectively.

Funds That Bucked the Trend

Despite having 71% of its assets in US companies, American Century Focused Global Growth TWGGX managed to post a 1.4% gain. Its fourth-largest holding, Meta Platforms META, held up well compared with its US tech peers, posting a 4.0% gain. Other US-based companies such as Uber Technologies UBER and AbbVie ABBV gained more than 15% over the period.

Conversely, despite only having 43% of its assets in US firms, Baron Global Advantage BGAIX missed out on the international rally. Its 5.9% decline was disappointing, thanks in large part to its 8.3% allocation to Nvidia. Other top-10 holdings such as Datadog DDOG and Zomato fell more than 25% over the period, too.

Emerging-Markets Dispersion

The Morningstar Emerging Markets Index rose 2.5% for the year through March 16, a disappointing 6.5 percentage points behind the Morningstar Developed Markets ex-North America’s 9.0% rise. Indian stocks, however, drove much of this underperformance. The Morningstar India Index fell 11.3%, while other major developing markets posted double-digit gains. The Morningstar China Index rose 19.1%, and the Morningstar Brazil index was up 14.5%.

Within the diversified emerging-markets category, the funds with less exposure to India tended to fare much better than peers. Virtus KAR Developing Markets VDMRX, KraneShares Dynamic Emerging Markets Strategy ETF KEM, Arga Emerging Markets Value ARMIX, and Lazard Emerging Markets Equity LZEMX were among the top-performing funds in the category. Each had less than 10% of their assets in Indian companies at the end of 2024 compared with the typical peer’s 17% allocation.

Meanwhile, William Blair Emerging Markets Small Cap BESIX, Wasatch Emerging Markets Small Cap WAEMX, Polar Capital Emerging Market Ex-China Stars POLCX, and Morgan Stanley Institutional Emerging Markets Leaders MELIX were among the worst-performing funds in the category. Each had more than 25% of assets in Indian stocks.

Time will tell if international stocks can extend their comeback versus US equities. Their recent surge, however, is a reminder of the importance of staying globally diversified, even when one area of the globe trounces another. You never know when the tide will turn, and if you wait for the rotation to start before buying, you risk being late and missing a good portion of the reversal.