Stock Strategist (ETF Edition): Foreign Stocks' Lost Decade

[Morningstar Logo]( [Company Site]( [Company News]( [Membership]( [Portfolio]( [Stocks]( [Options]( [Funds]( [ETFs]( [Markets]( [Tools]( [Personal Finance]( [Discuss]( Stock Strategist (ETF Edition) Foreign Stocks' Lost Decade They have suffered 10 years of poor earnings growth. [tab_bar] by Daniel Sotiroff | 9/9/2020 3:00:00 PM From the nadir of the financial crisis up to the early days of the coronavirus pandemic, foreign stocks failed to keep pace with U.S. stocks. And the gap in their postcrisis performance was wide. Between April 2009 and December 2019, the MSCI USA Index trounced the MSCI ACWI ex USA Index by about 7 percentage points annually. There are a number of factors explaining this divergence. Technology stocks have been among the best performers of the past decade and represent a larger share of the U.S. market than foreign markets. Also, an appreciating U.S. dollar hurt foreign stocks' dollar-denominated returns. While the U.S. market has clearly benefited from both trends, a deeper analysis reveals that differences in sector composition and a strong dollar played a relatively small role. As it turns out (and as should be no surprise) differences in earnings growth explain most of this gap. U.S. companies had much loftier earnings-growth rates than their foreign counterparts after controlling for their sector composition, which fueled their superior performance. To read more, click [here](. Sponsored Links [Buy a Link Now]( Podcast: Investing Insights From Morningstar.com Listen to a roundup of the latest videos featured on Morningstar.com [in this podcast]( available through iTunes. Free Issue | Morningstar's Stock Newsletter >> Morningstar StockInvestor is celebrating more than 10 successful years of high-quality stock investing. Its two real-money portfolios have outperformed the S&P 500 since 2001. [Get new ideas for the core of your stock portfolio.]( Search Most Recent Articles [A Checklist for Lobbying for a Better 401(k)]( [Weekly Wrap: Where We Stand Today With the Pandemic, Volatility, and More]( [FAQs on 401(k)s]( Latest Analyst Reports [Natixis Vaughan Nelson Mid Cap A]( [Victory Floating Rate Y]( [Eaton Vance Dividend Builder A]( [Transamerica Short-Term Bond A]( [First Eagle Global Income Builder A]( ABOUT OUR EMAIL To unsubscribe and update your preferences, go to our [email newsletter page](. All subscription changes will take effect within one business day. If you have questions about Morningstar.com or your membership, send a note to premium@morningstar.com. ABOUT OUR PRIVACY POLICY Please [click here]( to learn about Morningstar's privacy policy. (c) Copyright 2020. Morningstar, Inc. 22 W. Washington Chicago, Illinois, 60602 All rights reserved.