Q2 Investment outlook for advisors
Market trends and insights from the Schwab Center for Financial Research® and proprietary investment ideas from Schwab Asset Management®.

Market trends and insights for advisors
Stay up-to-date on the latest market trends and investment ideas to help position clients for long-term success.
Tariff day fallout underscores the importance of quality
New tariffs went beyond worst-case forecasts, sparking volatility, stoking recession fears, and fueling a market correction. Amid the tariff-clouded economic outlook, defensive, high-quality factors offer potential benefits.

International equities continue to outperform U.S. stocks
European stocks are benefiting from pro-growth policies and a relatively small exposure to U.S. exports, helping to offset U.S. tariff concerns while supporting international stocks’ relative outperformance.

Trade uncertainty weighing on fixed income markets
Caution is critical around credit and interest rate risks as markets price in a potential economic slowdown. Further price declines in lower-credit sectors may provide opportunities to take on additional risk down the road.


JACK McMANMON: For our Q2 investment outlook for advisors, I’m Jack McManmon, with two minutes on international equity opportunities for your clients.
As we start the second quarter, the backdrop for international equities look favorable, thanks in part to the European Union’s pro-growth, fiscal, and monetary policies, combined with a relatively small exposure to US exports. When talking with clients about international equities, here are three points we think are worth highlighting.
Point number one, international stocks by their nature provide exposure to non-US stocks, but they also provide very different sector exposures. Technology alone accounts for 39% of the S&P 500 Index’s revenue, but for international markets, it’s less than half that amount, and leading sectors are financials and industrials.
Point number two, despite the recent year rallies by international equities, they still trade at meaningful discounts to US stocks, particularly to US large-caps. This is a key reason Schwab’s 10-year return forecast for international large-cap, small-cap, and emerging market equities are higher than what we currently forecast for US large-caps.
Point number three, implementation has never been easier, and the key elements we seek in our portfolio construction approach—transparency, cost efficiency, and diversification—have improved dramatically over the years.
In international equities, investors had never had more opportunities. Perhaps you would like your clients focused on quality companies with a consistent history of paying dividends, or profitable companies with strong balance sheets, or broad low-cost exposure to the entire developed international equity market, Schwab Asset Management has many solutions to investing outside the US.
If you have any questions about international allocations or positioning in your client portfolios, please reach out to us for a complimentary portfolio evaluation. Thanks for watching.
Disclosures
Past performance is no guarantee of future results, and the opinions presented cannot be viewed as an indicator of future performance.
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.
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 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. Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve.
International investments involve additional risks, which include differences in financial accounting standards, currency fluctuations, political instability, foreign taxes and regulations, and the potential for illiquid markets.
Diversification strategies do not ensure a profit and do not protect against losses in declining markets.
Charles Schwab Investment Management, Inc., dba Schwab Asset Management® is a registered investment adviser and an affiliate of Charles Schwab & Co., Inc. ("Schwab").
©2025 Charles Schwab Investment Management, Inc. All rights reserved.
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