But why bother with a Bun?

Some time back, a fast food chain ran an advertising campaign featuring a study group of meat and cheese lovers.  In the ad, the facilitator explains company’s new burger, and one of the test attendees indicates that he’d rather only have the tastiest part of the meal when he answers “I like the meat and cheese part, but why a bun?”

Investors also sometimes ask themselves “Why the bun?”, however the question in that case might currently be “Why international stocks?”  With large company US stocks outperforming non-US and Emerging Markets stocks for several years in recent periods, people may wonder if these foreign investments are worthwhile.

The answer is that with foreign stocks becoming a larger share of the world’s investable universe, and with higher possible economic growth rates abroad, plus the potential of a reduction in overall risk in an investment portfolio by investing outside the U.S., and the added diversification benefit of utilizing multiple currencies, foreign asset classes can benefit investors in the long-run.  US stocks, Foreign and Emerging Market stocks are all influenced by different economic factors, each asset class has periods of high and low returns over time, and like most other things, markets are cyclical, but unpredictable.

Year-to-date through 6/30/2017, US stocks rose 9.3%, Foreign stocks went up 13.8% and Emerging Market Stocks jumped 18.4%. Are the tides turning towards Foreign and Emerging Markets stocks?  No one can tell you the answer to that question with precision, but markets do take turns over time.