US vs international equities: a statistical comparison

Why this comparison matters

After a decade in which a US-only index portfolio outpaced almost everything else, the term “US vs international” has become shorthand for a settled debate. The data tell a more cyclical story. Regional leadership has changed hands repeatedly over the past half-century, and the size of the recent US lead owes as much to rising valuations as to superior business performance. Reading the comparison through returns alone misses what actually drove the gap.

What US equities are

US equities, proxied by the S&P 500, are claims on the largest US-listed companies. The index is unusually concentrated: the top 10 names made up roughly 38% of it in early 2026, with information technology near 35% of the total, according to Madison Partners. That composition explains why US returns have tracked a narrow group of mega-cap growth firms. Over 1971 to October 2019, the S&P 500 compounded at about 10.6% a year, per Morningstar.

→ Detailed explanation: What drives stock returns over the long run?

What international equities are

International equities cover companies listed outside the United States, split between developed markets (the MSCI EAFE universe of Europe, Australasia and the Far East) and emerging markets. Their sector mix tilts toward banks, materials, industrials and energy, and information technology is a far smaller share, near 9% of MSCI EAFE. Because many of these economies are dollar borrowers and commodity exporters, their equity returns are tightly linked to the US dollar cycle. This is one of many such pages; the rest are in our shelf of comparisons.

→ In-depth explanation: Why are emerging markets more vulnerable to dollar cycles?

The key differences

Composition. The S&P 500 is a concentrated bet on US mega-cap technology; international indices are broader and more value-tilted. When a few large growth names lead, US indices lead almost by construction.

The return gap and what built it. From 2013 through July 2023, the S&P 500 returned about 13.6% annualized against roughly 6.2% for MSCI EAFE, per RBC Wealth Management. Since mid-2008 the gap was similar, 11.9% versus 3.6% through December 2024, per J.P. Morgan. But a large part of that gap came from multiple expansion: the S&P 500’s price/earnings ratio rose from about 12.8x to 21.7x, while EAFE’s moved from 11.3x to 14.0x. Higher prices paid for earnings, not only faster earnings, drove the divergence.

Valuation today. As a statistical observation, the gap is now wide. The S&P 500 Shiller CAPE stood near 39 as of June 2026, per GuruFocus, against a long-run median around 16; the global CAPE was about 27.7 in January 2026, per Siblis Research, with the US roughly two-thirds of that index. International developed and emerging markets trade at materially lower cyclically adjusted multiples.

How they behave across regimes

The pivot is the dollar and the discount rate. Through the 2010s, a strong dollar, falling real rates and accelerating technology earnings let US growth indices dominate, while EAFE and emerging markets lagged. In 2025 the pattern shifted: MSCI EAFE returned about 32% and emerging markets about 34% against roughly 17% for the S&P 500, the widest international margin in more than three decades, per Madison Partners. Historically, leadership has alternated in long cycles tied to currency strength and relative valuation, and the parameter that turns it is whether the dollar is appreciating and US multiples are expanding or contracting.

The US lead was earned in earnings and amplified by the multiple; the multiple is the part that can hand the lead back.

→ Framework: What is the CAPE ratio and what does it tell us about stock valuations?

The common confusion

The frequent error is to read a decade of US outperformance as proof that US equities are structurally superior and international ones a permanent laggard. The historical record does not support a permanent ranking: international stocks led through the 1970s, 1980s and the 2000s business cycle, when MSCI EAFE Value compounded at about 8.2% from 2000 to 2007 against 1.7% for the S&P 500, per MFS. Past relative performance reflects the regime that produced it, not a fixed property of geography.

Practical observation

Go deeper

Related guides

• Developed vs emerging markets
• Value vs growth

Frequently asked questions

How is the US equity market different from international markets?

The main differences are concentration and sector mix. The S&P 500 is heavily weighted toward a small number of mega-cap technology companies, with the top 10 names around 38% of the index in early 2026 and technology near 35%. International developed and emerging indices are broader, with larger weights in banks, industrials, materials and energy, and a much smaller technology share. This composition means US and non-US indices respond differently to the same shock: the US is more sensitive to technology earnings and to falling discount rates, while international markets are more sensitive to the dollar cycle, commodity prices and global trade.

Why did US equities outperform international ones for so long?

Two forces combined. The first was faster earnings: US nominal GDP and corporate earnings grew more quickly than in Europe or Japan over the 2010s. The second, often overlooked, was valuation expansion. From mid-2008 to December 2024 the S&P 500’s price/earnings multiple rose from about 12.8x to 21.7x, while MSCI EAFE expanded only from 11.3x to 14.0x, per J.P. Morgan. A stronger dollar over the same period further lifted US returns measured in dollars. Because part of the lead came from paying more for each dollar of earnings, it depends on multiples staying elevated, which is the cyclical element rather than a permanent advantage. A complementary angle: our study on capital flows and price formation in financial markets.

How do US and international equities compare on valuation now?

As a statistical observation, US equities trade at a substantial cyclically adjusted premium. The S&P 500 Shiller CAPE was near 39 as of June 2026, per GuruFocus, against a long-run median around 16 and the second-highest reading since 1871. The global CAPE was about 27.7 in January 2026, per Siblis Research, and developed and emerging markets outside the US trade at lower multiples. Shiller’s research documents an inverse relationship between starting CAPE and subsequent long-run returns, though it is not a timing tool and elevated valuations can persist for years.

Last updated — 12 July 2026