Meketa analyzes the structure, performance, and diversification role of developed markets outside the U.S., finding that while correlations with U.S. equities have risen, these markets still offer unique sector and currency exposures. The report also explores index composition changes, currency risk management, and the evolving balance between active and passive implementation.
Developed ex-US equities
Meketa
Frank Benham, Braden Clark
Research
13 Pages
Key Takeaways
Global relevance: Developed ex-U.S. equities represent roughly 26% of global GDP and 22% of world market capitalization.
Sector evolution: Industrials’ weight in MSCI EAFE nearly doubled to 19% since 2005, while financials remain dominant versus the U.S.’s tech-heavy bias.
Diversification potential: Despite higher currency-driven volatility, non-U.S. equities continue to lower overall portfolio drawdowns and enhance long-term risk-adjusted returns.
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