U.S. stock investors may find themselves feeling disheartened as the market shows a lackluster performance so far in 2026. The S&P 500 index has recorded a modest increase of only 0.5% year to date, while the tech-heavy Nasdaq-100 index has experienced a decline of approximately 1.2%. These downward trends can largely be attributed to emerging concerns about artificial intelligence (AI) and a sell-off in software stocks.
In contrast, international markets appear to be gaining momentum. Recent data from LSEG/Lipper indicates that U.S. investors have withdrawn about $75 billion from U.S. stocks over the past six months, with a staggering $52 billion of this amount occurring since the beginning of the year. This marks the quickest pace at which U.S. investors have exited the domestic stock market in the first eight weeks of a year since at least 2010.
With investors shifting their focus, could this signal the onset of a long-term “bye, America” trend? Analysts are now advocating for a more diversified approach that includes international stocks, which have outperformed American equities over the past year. Notably, South Korea’s stock market has surged approximately 177% during this time frame. LSEG/Lipper data suggests that U.S. investors have allocated $26 billion to emerging markets this year, with South Korea and Brazil receiving the most significant inflows.
Several factors may account for the strong performance of international stocks. A declining U.S. dollar, heightened apprehension about the high valuations and risks associated with AI stocks, and favorable investor policies in other countries all play a role. However, the primary factor driving investment toward international markets is likely optimism surrounding sustained economic growth and rising earnings abroad. Even if the U.S. market experiences growth, international stocks might expand at an even quicker pace.
For those looking to capitalize on the “bye, America” sentiment, the Vanguard Total International Stock ETF (NASDAQ: VXUS) presents an attractive opportunity. This fund offers investors exposure to 8,691 stocks at a low expense ratio of 0.05%. It diversifies across global markets, including Europe (37.9% of the fund), Emerging Markets (26.6%), and the Pacific (26.4%). Over the past year, VXUS has outperformed both the S&P 500 and the Nasdaq-100 indexes, delivering average annual returns of 10.6% over the past decade. Its price-to-earnings ratio stands at 19.1, indicating that international stocks may still be undervalued compared to their American counterparts, particularly given that the S&P 500 has a P/E ratio of 27.6.
While past performance cannot guarantee future results, and the U.S. stock market may experience a resurgence, the Vanguard Total International Stock ETF provides a straightforward, cost-effective avenue for investors seeking to broaden their portfolios beyond the U.S. economy.
Before investing, it is essential to consider that other investment opportunities may be more promising. Analysts from The Motley Fool Stock Advisor have identified ten stocks they believe present significant potential for returns, and Vanguard Total International Stock ETF is notably absent from this list. Historical performances from prior recommendations highlight the potential gains. For example, had an investor put $1,000 into Netflix when it was recommended in 2004, it would have grown to $534,008 by now. Similarly, an investment in Nvidia from 2005 would have mushroomed to over $1 million today.
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