June 2021 Issue: Help your Clients Grasp the Case for International Investing-Help your Clients Grasp the Case for International Investing by David Sterman

Help your Clients Grasp the Case for International Investing by David Sterman

Pdf Summary

The article discusses the case for international investing and the potential for superior outperformance in markets beyond the U.S. In 2020, the S&P 500 delivered strong gains of 16.26%, outperforming non-U.S. developed markets and emerging markets. However, it is important for advisors to focus on long-term investment decisions rather than short-term performance.<br /><br />The article highlights attractive valuations in developed markets like Europe, Australia, and Japan, which have lower price-to-earnings ratios and higher dividend yields compared to the S&P 500. Emerging markets also present an opportunity due to relatively inexpensive valuations and the potential for robust spending growth driven by a young population.<br /><br />Youth demographics play a significant role in emerging markets, with a fast-growing cohort of future consumers expected to drive economic growth over the next decade. As middle-class populations expand, spending on education, healthcare, consumer goods, and recreational activities is projected to increase.<br /><br />While global interest rates can impact emerging markets, concerns about the impact of rising rates appear to be lower this time around. Recovery across Asia's emerging economies is expected to withstand rising U.S. yields as long as it reflects reflation rather than a monetary shock.<br /><br />The article concludes by emphasizing the more attractive valuations and long-term growth potential in non-U.S. developed markets and emerging markets compared to the U.S. market. These factors should encourage clients to consider the value of global diversification in their investment portfolios.

Keywords

international investing

superior outperformance

S&P 500

emerging markets

attractive valuations

youth demographics

economic growth

global interest rates

rising rates

global diversification