For our Q4 Investment Outlook for Advisors, I’m Riz Hussain, with two minutes on portfolio construction insights.
As we approach year end, it’s an important time to explore rebalancing opportunities as you and your clients begin looking ahead to the new year. When you start to have these critical conversations, here are three points we think are worth highlighting about the opportunity in international equities.
First, if resilient demand and solid earnings growth accompany rising yields, international equities may still perform well. In Europe, earnings have rebounded and broadened in 2026, and fiscal spending plans on infrastructure and defense by Germany offer a potentially durable multi-year tailwind for regional earnings and growth. Viewed through a portfolio construction lens, Europe’s stock market is a value-factor and cyclically oriented, with large weights in sectors like financials, industrials, consumer discretionary, energy, and materials. So adding international equities could potentially serve as diversifying complements to your clients’ domestic equity exposures.
Second, in spite of generating total returns of more than 30% in 2025, and roughly 10% year-to-date through September, international developed market stocks remain attractively valued compared with US stocks. This is a key reason why Schwab’s 10-year expected returns for international large- and small-cap stocks are higher than the forecast for US large-caps.
Third, cost-efficiency, transparency, and the breadth of investment opportunities have improved dramatically over the years.
Whether your clients need broad, low-cost international market exposure, are searching for a fundamental index strategy, or would prefer to emphasize quality companies with a consistent history of paying dividends, Schwab Asset Management offers many solutions to help your clients invest beyond the US.
If you have any questions about international allocations and positioning in your clients’ portfolios, please reach out to us for a complimentary portfolio consultation. Thanks for watching.
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Past performance is no guarantee of future results. The value of investments and the income derived from them can go down as well as up. Future returns and the achievement of stated goals are not guaranteed, and a loss of principal may occur.
Investing involves risk, including loss of principal. The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for
everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.
All expressions of opinion are subject to change without notice in reaction to shifting market, economic, or political conditions. Data contained herein from third party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed.
International investments involve additional risks, which include differences in financial accounting standards, currency fluctuations, geopolitical risk, foreign taxes and regulations, and the potential for illiquid markets. Investing in emerging markets may accentuate this risk.
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Diversification strategies do not ensure a profit and do not protect against losses in declining markets.
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