In a notable shift for 2026, international stocks are outpacing U.S. equities, with the Vanguard Total International Stock ETF (VXUS) rising 7.6% year to date, compared to the S&P 500’s 4.2% gain. Vanguard’s latest economic outlook suggests that global stocks could outperform U.S. tech stocks for the next several years, signaling a potential pivot in investor focus. This comes amid concerns over high valuations in the U.S. market, particularly within the tech sector, where major companies are heavily investing in AI.
Vanguard’s projections indicate that international equities may deliver average annual returns of 4.9%-6.9% over the next decade, while U.S. stocks are expected to yield only 4%-5%. The Vanguard International High Dividend Yield ETF (VYMI), which targets developed-market stocks, has already shown strong performance, outperforming both the S&P 500 and Nasdaq-100 for most of 2026, with a compelling dividend yield of 3.64%.
For market professionals, this trend underscores the importance of diversifying portfolios beyond U.S. tech, as international equities may present more attractive risk-reward profiles in the coming years.
Source: fool.com