Diamond Hill Capital Management explains why international equities remain relevant despite a decade of US dominance, focusing on diversification, opportunity set, and valuation gaps. The paper argues over 40% of global market cap sits outside the US and highlights that US stocks have historically underperformed in 7 of 10 years during prior cycles.
4 Reasons To Invest Internationally
Diamond Hill Capital Management
Research
4 Pages
Key Takeaways
Global Opportunity Set: Over 40% of global market cap and roughly 80% of investable securities are outside the US, highlighting a significantly larger investable universe beyond domestic markets.
Cyclical Performance Patterns: US equities underperformed international markets in 7 of 10 years from 2002–2011, reinforcing that leadership rotates and recent outperformance may not persist.
Relative Valuation Advantage: Non-US equities trade at lower multiples, with forward P/E around 15.7x versus 22.1x in the US, suggesting greater room for valuation expansion abroad.
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