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Investing Specialists

Opinions All Over the Map on Foreign Stocks

When it comes to overseas equities, many readers say they're staying put while others are adding to or subtracting from their exposure.

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Stock investors have faced a classic investing conundrum in recent years. While the U.S. equities that typically make up the bulk of their portfolios have fared well, foreign equities that can help diversify their portfolios have lagged--sometimes badly. Consider that, over the past five years, the S&P 500 Index of U.S. large- and mid-sized company stocks has returned 15.9% per year on average while the MSCI ACWI ex USA Index, which tracks companies of comparable size in developed and emerging markets outside the U.S., has returned just 5.6% over the same time period (both as of Jan. 29). This disparity has been even more pronounced recently. In 2013, when U.S. stocks rose 32.4% (including dividends), foreign stocks gained just 15.3%, and last year, U.S. stocks gained 13.7% while foreign stocks lost 3.9%.

Adam Zoll does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.