International Stocks Smacked the S&P 500 by About 15 Points Last Year, And One ETF Rode The Boom Higher | GSPC

"In 2025, international stocks returned roughly 32% while the S&P returned roughly 18%, a gap of about percentage points that was hard to explain away as noise."

"The first is that the US dollar weakened over the course of the year, which automatically boosts return on foreign assets when converted back to dollars."

"The Vanguard Total International Stock ETF carries a P/E of 16.21, a discount of nearly half compared to the S&P 500, which trades at roughly 29 times earnings."

"With 8,703 holdings across both developed and emerging markets, the Vanguard Total International Stock ETF is about as diversified as a single fund can get."

In 2025, international stocks returned 32% compared to the S&P 500's 18%, highlighting a significant performance gap. This outperformance was driven by three main factors: a weakening US dollar, which enhanced returns on foreign assets; European governments implementing fiscal stimulus programs that improved earnings expectations; and the high valuations of US technology stocks, making international markets appear comparatively cheap. The Vanguard Total International Stock ETF, with a P/E of 16.21, exemplifies this valuation gap, offering broad diversification at a low expense ratio.

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