International developed market stocks are outperforming U.S. equities year-to-date by nearly 7 percentage points, reminding investors of the value of global diversification after years of U.S. dominance.
Weaker dollar, attractive valuations, and recovering European economies are contributing to the rotation. Emerging markets have also posted strong gains, led by Latin America and Southeast Asia.
Portfolio managers suggest target international allocations of 25-40% of equity holdings for most long-term investors, typically split between developed and emerging markets.
