403(b) Curriculum Library

Chart of the Month: U.S. Equity Performance Continues to Outpace the Rest of the World

Source: Morningstar

Market Observations

The deviation between the performance of U.S. equity versus the rest of the world continues to increase. Over the last decade, U.S. stocks have delivered an average annual return of over 13.0% per year. This compares to an average gain of 5.0% for the rest of the world over the same period. The perennial outperformance of U.S. stocks has largely been driven by stronger economic growth, a surging dollar, and the predominance of high-flying technology stocks in U.S.-centric indices. With the relative performance differential at an extreme, it begs the question: when will international stocks stage a comeback? While timing the market is extremely challenging, it is worthwhile to remember that financial market returns are mean-reverting. Mean reversion is a financial theory that assumes markets will trend to a historical average over time, meaning that periods of above-average performance are inevitably followed by periods of below-average performance. Given the strong outperformance of U.S. equities in recent years, it may be a good idea for investors to review their asset allocation and consider rebalancing their portfolio towards their target weightings.

Note: The information contained herein has been obtained from sources that are believed to be reliable. However, Cammack Retirement Group does not independently verify the accuracy of this information.

The benchmarks are not intended to represent an investor’s performance, but rather to allow for the comparison between the performance of U.S. Equities and International Equities. An investment cannot be made in an index. Past performance is no guarantee of future results.

Note: This feature is to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice. Opinions expressed are those of the author, and do not necessarily represent the opinions of Cammack Retirement Group.

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