Classic and Current Rationale Spell Investment Opportunities Overseas

Classic Rationale

When U.S. Stocks Dominate, Overseas Companies Tend to Be Undervalued

Global Market Leaders Change Hands over Time
Annual Returns (Ranked in Order of Performance)

Sources: FactSet,, and Standard & Poor’s. U.S. is the S&P 500 Index, other regions are MSCI indices. All MSCI indices are net USD returns. Past performance does not guarantee future results.

After many years leading the pack, U.S. equities trailed overseas stocks last year. Is the tide turning? Now may be a good time to increase allocations to international stocks.

Cycles of Global Investment Performance... and Outperformance
U.S. Market vs. International Markets

Source: Morgan Stanley, Bloomberg, Thornburg Investment Management. Past performance does not guarantee future results.

Outperformance by U.S. or non-U.S. markets has sometimes been fleeting and sometimes lasted many years, with significant variances at times. This makes the case to always have some representation of both in a diversified portfolio.

More Opportunities Abroad, But Investors Staying Home

Home Country Bias - US-based Investors Overinvested at Home

World GDP: International Monetary Fund, World Economic Outlook Database, April 2018
U.S. Equity Fund Assets: 2018 Investment Company Fact Book, Investment Company Institute, as of 12/31/2017

The United States represents 24% of global Gross Domestic Product. Despite this growing opportunity set, U.S. investors continue to show home country bias, preferring domestic equities over international stocks by a wide margin.

Source: International Monetary Fund, World Economic Outlook Database, October 2017.

The direction of the global economy favors emerging market advancement over time.

Current Rationale

What This Means for Overseas Investing.

On a Broad Company Level, Upside Potential Appears Better Overseas

Source: Bloomberg.

We search the globe for fundamentally sound, undervalued companies, more of which are overseas. Non-U.S. company P/Es are near 10-year lows relative to the U.S. While last year’s returns look great, valuations for international stocks remain quite compelling.

Overseas Growth Data Is Strengthening

More Opportunities for Earnings Growth

Source: Bloomberg, based on estimated earnings per share.

U.S. companies are reporting peak level earnings; while strong, perhaps there is more room to run internationally, as earnings remain over 25% below the peak.

Eurozone Purchasing Managers' Indices Directionally Higher

Source: Bloomberg.

The Purchasing Mangers’ Indices (PMI), as survey indicator of economic health, while below peak levels, still indicate economic expansion.

Industrial Production on the Rise

Source: Bloomberg.

Industrial production, a leading economic indicator, in Europe remains around multi-year highs.

China Production is Strong and Steady

Source: Bloomberg.

Producer prices in the world’s second-largest economy remain strong relative to where they’ve been over the last few years. As a major global exporter, China now is no longer exporting deflation, and rather is a clear driver of global growth.

Learn more

International Investing: Get Ahead of the Curve

The current and classic rationale for overseas investing are compelling, especially right now!


Important Information
Before investing, carefully consider the Fund’s investment goals, risks, charges, and expenses. For a prospectus or summary prospectus containing this and other information, contact your financial advisor or visit Read them carefully before investing.

Investments carry risks, including possible loss of principal. Additional risks may be associated with investments outside the United States, especially in emerging markets, including currency fluctuations, illiquidity, volatility, and political and economic risks. Investments in small- and mid-capitalization companies may increase the risk of greater price fluctuations. Portfolios investing in bonds have the same interest rate, inflation, and credit risks that are associated with the underlying bonds. The value of bonds will fluctuate relative to changes in interest rates, decreasing when interest rates rise. Investments in the Funds are not FDIC insured, nor are they bank deposits or guaranteed by a bank or any other entity.

Please see our glossary for a definition of terms.

Thornburg mutual funds are distributed by Thornburg Securities Corporation.

The performance data quoted represents past performance; it does not guarantee future results.

Thornburg Investment Management, Inc. mutual funds are sold through investment professionals including investment advisors, brokerage firms, bank trust departments, trust companies and certain other financial intermediaries. Thornburg Securities Corporation (TSC) does not act as broker of record for investors.