Why Diversify Internationally?

Over the past decade, it has been an undeniably tough stretch for international equity markets relative to U.S. equity markets. With the S&P 500 outpacing international equity market indices by nearly double since 2010, many investors wonder: what's the point of diversifying internationally?

 This week's highlight article reinforces the case for international diversification. The relative performance between U.S. equity markets and international equity markets is cyclical just like everything else in the markets. With international markets sporting equity and currency valuations, the case for the cycle turning to international outperforming is growing stronger. 

 Diversification is hard because you just know there is always going to be something in your portfolio that’s going to underperform. You just don’t know what asset class or strategy it will be at any given time.

Economic data trends

Economic data continues to exceed expectations. As highlighted in this week's chart, Citigroup's Economic Surprise Index - which measures the degree in which actual economic data beats or misses economist forecasts - has been climbing sharply in 2023 and now sits at the highest level since April 2022.

What Else We're Reading

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