Global Equities Outperform US Stocks in 2025, But Trend Faces Headwinds
Table of Contents
Despite a recent shift in momentum, international stocks continue to deliver stronger returns than US equities year-to-date, though analysts caution this outperformance may not last. data through Tuesday, September 9, 2025, reveals a compelling narrative of global equity strength, but also signals a potential reversal.
International Stocks Led the Charge
The Vanguard Total International ETF has surged 24.1% in 2025, substantially outpacing the 11.6% gain recorded by the SPDR S&P 500 ETF (NYSE:). This impressive performance extends across a range of international proxy funds, all of wich are currently showing year-to-date returns exceeding those of their US counterparts.
“All the international proxy funds continue to post year-to-date returns well above the year’s rise for US shares,” one analyst noted. This broad-based strength underscores a period of robust growth in overseas markets.
signs of a Potential Reversal
However, the tide may be turning. Leadership has begun to favor American shares in recent months, and indicators suggest the period of peak outperformance for foreign companies has passed. A key metric for tracking this shift is the ratio of VXUS to SPY,a proxy for the relative performance of international versus American shares.
According to the data, the strong outperformance of foreign companies peaked in mid-April, with US stocks beginning to outperform as then. While this reversal hasn’t fully materialized in year-to-date comparisons, the recent stability of the VXUS:SPY ratio is prompting debate.
Is This a Short-Term Blip or a New Trend?
The question now is whether the strength in foreign stocks represents a period of consolidation before another leg up, or an early indication that global shares are poised to underperform US equities once again. A longer-term chart of the VXUS:SPY ratio suggests caution.
“viewed in context with history, 2025’s strength in offshore equities still looks like noise in a longer-term trend that favors US stocks,” a senior official stated. The past data indicates that the current outperformance coudl be a short-term trend reversal rather than a fundamental shift in market dynamics.
While the broader trend may eventually favor US stocks, opportunities still exist within international markets. Even if the overall tailwind fades, regional and contry markets can still outperform.
“Keep in mind that even if the broad trend for international stocks writ large fades again vs. the US, regional and country markets can still outperform,” one analyst cautioned. However, the loss of a significant macro tailwind would undoubtedly present a challenge. Ultimately, the case for continued international outperformance remains “a work in progress,” requiring careful monitoring and analysis.
Why, Who, What, and How did it end?
Why: International stocks outperformed US stocks in the first part of 2025 due to strong growth in overseas markets. Though, this trend is facing headwinds as US stocks begin to regain leadership.
Who: Analysts, a senior official, and investors
