Global Gains: Investing Across Borders for Greater Returns

In an interconnected world, savvy investors are increasingly looking beyond their home borders to capture superior returns and diversification.

The year 2025 has been a testament to this strategy, with international stocks delivering impressive gains of over 30%.

This outperformance highlights the potential of global markets to enhance outcomes for those willing to explore overseas opportunities.

The 2025 Surge: International Markets Outperform

Non-US stocks have surged, returning approximately 30% year-to-date in 2025, outpacing the S&P 500.

This remarkable performance is driven by several key regions and factors.

• Europe experienced amplified gains in USD terms due to a decline in the US dollar.
• Catalysts include falling interest rates, increased defense spending, and strong corporate earnings.
• For instance, banks like UniCredit and Deutsche Bank had stellar years.
• The ECB cut rates by 235 basis points from June 2024 to June 2025, boosting credit growth.

In Asia, China's market rose by 25%, powered by companies like Tencent and Alibaba.

Korea saw an even more dramatic increase of 43%.

Japan posted solid returns, supported by ongoing shareholder reforms.

Latin America rebounded strongly, with Mexico and Brazil gaining around 30% from their 2024 lows.

To put this in perspective, consider the following table of key performers.

This data underscores the attractive valuations and growth available outside the US.

The US dollar's fall in the first half of 2025 further aided these returns for dollar-based investors.

Historical Context: The Long-Term Edge

Looking back over decades, international investing has consistently offered stable returns for US investors.

Overseas portfolio returns have averaged over 3% annually for the past 20 years.

This stability is evident in the lower variance compared to foreign direct investment.

• US investors' income from overseas has grown faster than exports or FDI.
• Cross-country return gaps show that nations like the US, UK, and Canada have historically outperformed.
• For example, from 1975 to 2023, $1 invested in the US grew to 85 times its value.
• In contrast, Germany saw only an 8-fold increase, highlighting significant disparities.
• Germany forgone approximately €4 trillion in potential wealth compared to a US-like strategy.

These historical patterns suggest that diversification across borders can mitigate risks and enhance long-term wealth.

Global external assets now exceed 200% of world GDP, indicating the scale of cross-border investments.

Private Markets and Alternative Assets

Beyond public equities, private markets offer additional avenues for global gains.

Real estate and infrastructure are particularly promising sectors.

• Global real estate deal value increased by 11% to $707 billion in 2024.
• Data centers delivered returns of over 11%, while multifamily and industrial sectors stabilized.
• Infrastructure is driven by global trade and clean energy needs, projected at $6.5 trillion annually by 2050.
• Cross-border commercial real estate investment in the US saw a 130% year-over-year increase in Q1 2025.
• Industrial properties remain strong, with hospitality investments surging thirteenfold to $284 million.

This demonstrates the resilience and opportunity in private assets internationally.

US long-term inbound cross-border CRE averages around $50 billion annually, showing sustained interest.

Future Outlook: Opportunities Ahead

The prospects for international investing remain bright heading into 2026 and beyond.

Non-US markets are currently priced to deliver better returns over the next decade.

• Europe is benefiting from fiscal stimulus, while Japan continues with shareholder reforms.
• Emerging markets, especially in Asia, are poised for growth driven by AI and low-cost electricity.
• Surveys show that 80% of companies plan to increase R&D and M&A activities, tied to AI advancements.
• 71% of firms report AI profitability, and 66% see revenue growth from AI implementations.
• Sustainability efforts are boosting energy efficiency and climate resilience across industries.

Capital flows are shifting, with European investors moving €125 billion to international and European equity funds.

This indicates a growing confidence in global markets and a rebalancing away from US-centric portfolios.

Economic projections for late 2025 show US growth at 2.5%, Euro area at 1.2%, and China at 4.8%.

These differentials highlight the potential for asymmetric returns across regions.

Risks and Considerations for Diversification

While the opportunities are substantial, investors must be aware of the risks involved.

Diversification benefits can be underwhelming if correlations between US and international stocks rise.

• Currency volatility is a significant factor, as exchange rate fluctuations can impact returns.
• Geopolitical uncertainties, such as tariff policies and regional conflicts, add to the complexity.
• For example, German investors have become more risk-averse due to economic concerns.
• Tariff uncertainties may be peaking, but they still pose a threat to cross-border investments.

Despite these challenges, the stable income from portfolios compared to FDI suggests that careful strategy can yield rewards.

Investors should use data from reliable sources like BEA, UNCTAD, and World Bank to inform their decisions.

The TIC data on US claims on foreign securities provides valuable insights into capital flows.

Conclusion: Embracing Global Growth

Investing across borders is not just a trend but a strategic imperative for modern portfolios.

The 2025 performance, historical data, and future outlook all point to the advantages of global diversification.

• Start by exploring undervalued markets in Europe and Asia.
• Consider private assets like real estate and infrastructure for added diversification.
• Stay informed about currency risks and geopolitical developments.
• Use data from sources like BEA and UNCTAD to guide decisions.
• Embrace the transition to AI and clean energy as growth drivers.

By taking a global perspective, investors can unlock greater returns and reduced risk.

The world is full of opportunities; it's time to look beyond the horizon and capture the gains that await.

Embrace the journey with confidence and informed strategy.

Let global gains transform your financial future.