Foreign Stocks Lose Their Edge As U.S. Momentum Roars Back

Foreign equities continue to outperform U.S. stocks this year, but there are signs that international leadership is faltering, based on a set of ETFs through Monday’s close (Aug. 10). Vanguard Total International Stock Index Fund is up 15.7% year to date, maintaining a moderate premium over the U.S. stock market’s 14.0% gain via the SPDR S&P 500 ETF. But the return spread is narrowing, and the recent surge in U.S. stocks could be an early sign that international equities will soon fall behind in relative terms. The recent soft patch is also evident in emerging markets.