While the S&P 500 (SPX) has returned almost 18% year-to-date, which includes recovering from a 15% drop in April from President Trump’s reciprocal tariffs, the benchmark index is still trailing its global peers by a wide margin.
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The MSCI All Country World ex-US Index has returned about 29% in 2025, placing the S&P 500 on track for its worst year of underperformance compared to the index since 2009.
U.S. Tariffs and Valuation Concerns Drive International Gains
Lingering concerns of tariffs and high valuations have led global investors to diversify their holdings outside of the U.S. That’s contributed to higher returns in China, South Korea, Germany, and emerging markets.
“Many of the investors I talk to are examining their geographical allocations in light of the big-picture events of the past year,” said Niamh Brodie-Machura, co-CIO of equities at Fidelity International.
While the AI boom has benefited U.S. companies, like Nvidia (NVDA), other countries have taken advantage as well. DeepSeek propelled China as a legitimate AI contender, while South Korea’s Samsung (SSLNF) and SK Hynix have generated triple-digit gains.
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