‘Nearly every investor’ could benefit from adding this investment, says expert

The S&P 500 — a measure of the broad U.S. stock market — returned nearly 18% in 2025, the index’s third straight year of double-digit gains.

For the first time since 2022, however, the stocks from the rest of the world did even better. The MSCI EAFE Index, which tracks international stocks from developed nations, posted a return of roughly 32% last year, and the MSCI Emerging Markets Index, which tracks stocks from developing economies, posted a 34% return.

With both indexes leading the S&P so far in 2025, it may be worth examining what role international stocks currently play in your portfolio.

“Nearly every investor that we speak to could probably benefit from adding some international allocations,” Kristy Akullian, head of iShares investment strategy for the Americas at BlackRock, recently told CNBC Make It.

It’s not just a matter of investing in what’s done well recently. Rather, after years of domestic stocks crushing their international rivals, many investor portfolios are heavily tilted toward U.S. names. Upping your exposure to international stocks may be a smart way to even things out, Akullian says.

“We know that most U.S. investors are very overweight U.S. equities. There is a very strong country bias,” she says. “And it’s not a matter of being a little bit overweight relative to a broad benchmark; it is orders of magnitude more overweight.”

In 2025, international names began to turn the tide. For one thing, the global economy grew faster than the U.S. economy last year, with certain emerging nations, such as India and China, growing at an even faster clip — a trend analysts at Goldman Sachs expect to continue this year.

Fiscal stimulus and announcements for increased European defense are among factors that bolstered returns in developed markets, Akullian says. And emerging markets, such as China and Taiwan, got a boost from the shift to artificial intelligence.

“Much of the production of the AI supply chain happens … in emerging Asian markets,” she says. “They have been the beneficiary of some of the enthusiasm that we have seen for AI, and not just enthusiasm, but some of the capital expenditure and the investment that we have as a result of AI.”

Aiding foreign stocks across the board was a steady decline in the value of the U.S. dollar, meaning that American investors got more dollars for profits international companies earned in foreign currencies.

“If the dollar continues to break down, the first thing we’d look to do is to add international [stocks], because the dollar is such a key piece of that equation,” says Jeffrey Buchbinder, chief equity strategist at LPL Financial.

And despite a long drought in recent years, foreign stocks do sometimes spend long periods leading U.S. names, as they did for the back half of the 1980s and much of the early 2000s, according to data from Hartford Funds.

If you have next to no international exposure, consider diversifying, says Akullian. Adding emerging market stocks, she says, will get you exposure to companies in fast-growing economies while developed-market stocks may be a way to make your portfolio a little less reliant on the AI revolution. Just under 10% of the EAFE’s stocks are in tech, compared with nearly 35% of the S&P 500.

And with foreign stocks getting off the mat of late, it may not feel like you’re leaving money on the table by diversifying, Akullian says.

“There are more ways to invest now where you can be deliberately more diversified, and the tradeoff is not quite as dark as it has been in previous years.”

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