The argument for owning international equities in
2019 is stronger than ever. And that’s despite their
current depressed levels.
Most foreign markets had a bad 2018 – in fact, you
would be hard-pressed to find overseas markets that
didn’t perform worse than those in the U.S. But
remember this, holding overseas equities can help
limit your risk, because they diversify your portfolio
U.S. Markets Were Down in 2018, But…
Your overall U.S. market returns last year were likely
half as bad when compared to the double-digit losses
most international markets suffered in 2018.
In fact, contrary to 2017 – when international and
emerging markets did better than their U.S.
counterparts – 2018 saw markets outside the U.S.
fare worse, generally speaking:
S&P 500 was down 6.2%
MSCI EAFE was down 16.1%;
MSCI Europe was down 17.3%; and
MSCI Far East was down 13.9%.
Further, of the 32 MSCI Indices that track developed
global markets, not a single one was in positive
But don’t think that the poor performance was
constrained to regions overseas – take a look at the
MSCI Indices that track developed countries:
MSCI Index 2018
United Kingdom -17.74%
While such a wide gap in performance can frustrate
investors, realize first that the gap is, in fact, the
hallmark of a well-diversified portfolio. Good
diversification means that you may expect
disappointment in at least one asset class every year.1
The historically long-bull market for U.S. markets –
which may or may not be ending – might have
tempted you to discard time-tested tactics of
diversification, at least when it comes to investing
Such abandonment usually occurs because you get
greedier or you get more scared. It’s important that
you don’t panic out of an asset class after a large
decline. Equally important, don’t panic into an asset
class after a large and sustained rally.
Why Invest Overseas
If hesitant to invest abroad, you’re not alone –
especially when the U.S. market outperforms
overseas counterparts. Many compelling reasons
nevertheless remain for keeping the big, global
investing picture in mind:
Twice the opportunity. The American stock
market represents just half of the publically
investable stocks worldwide. While it may feel
safer to invest in companies close to home,
you risk missing out on half of global
A smoother ride. While overseas equities’
performance this year lags way behind
domestic returns, foreign markets have
historically produced comparable returns. In
fact, from the period from 1971 through 2018,
half the time foreign stocks have outperformed
their American counterparts.
More importantly, foreign stocks often perform
very differently than U.S. stocks in any given
year. While long-term returns are similar,
shorter-term disparities allow you to smooth
out the occasional extremes (and jitters) from
investing in one market. The differences also
provide great opportunities to sell high and
buy low as you rebalance holdings.
Overall reduction of risk. As overseas
stocks recently saw slightly higher volatility
than U.S. stocks, adding foreign exposure to
lessen your portfolio risk seems
counterintuitive. But remember: U.S. and
foreign stocks tend to perform differently.
What’s up today and down tomorrow
historically reverse positions over time.
Important Disclosure Information
The article above was provided to Synovus by eMoney Advisor, LLC, and is used here with permission from eMoney or a third party content provider. eMoney does not provide investment, tax, legal, or retirement advice or recommendations. The information presented here is not specific to any individual's personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. This information was provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.
This content is general in nature and does not constitute legal, tax, accounting, financial or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.
Diversification does not ensure against loss.
You are about to leave the Synovus web site for a third-party site
Third-party sites aren't under our control, and we are not responsible for any of the content or additional links they contain. We don't endorse to guarantee the goods or information provided by third-party sites, and we're not responsible for any failures or inaccuracies. Third-party sites may contain less security and may have different privacy policies from ours.