U.S. stock markets surged following a ceasefire in the Iran conflict, with the S&P 500 and Nasdaq-100 reaching all-time highs. The optimism surrounding the end of hostilities has rekindled investor interest in international equities, which had previously outperformed U.S. stocks before the war began. The FTSE Global All Cap ex-US Index, for instance, had been gaining traction, but the conflict led to significant declines in markets reliant on Middle Eastern oil, such as Japan’s Nikkei 225, which fell 13% during the war.
As the geopolitical landscape stabilizes, international ETFs like the Vanguard Total International Stock ETF (VXUS) and the Vanguard International High Dividend Yield ETF (VYMI) are positioned to benefit. VXUS boasts a diverse portfolio of nearly 8,800 stocks with strong returns, while VYMI focuses on high-dividend companies, showing impressive growth over the past year. Emerging markets ETFs like the State Street SPDR Portfolio Emerging Markets ETF (SPEM) may also present opportunities for risk-tolerant investors.
In summary, the ceasefire could signal a favorable shift for international investments, making ETFs like VXUS and VYMI attractive options for those looking to diversify away from U.S. equities. Investors should consider these funds as potential beneficiaries of renewed global economic growth.
Source: fool.com