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.

U.S. equities have done exceedingly well recently, outperforming overseas markets in the last four years. How much longer will this trend continue? Now may be a good time to increase allocations to international stocks.

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

Source: Morgan Stanley, Bloomberg. 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.

As the Global Economy Grows, So Do the Investment Opportunities Overseas

Source: MSCI AC World Index as of December 2016. Non-U.S. percentage excludes the United States.

Since 1970, the U.S. share of global stock market capitalization fell from a towering 66% to 54%, as the rest of the world created new and exciting public companies to invest in.

Source: International Monetary Fund, World Economic Outlook Database, October 2016.

The U.S.’s share of the world’s economic output stood at 26% in 1980, and has shrunk to 22%, as emerging markets, especially China, continue to represent more of the global pie.

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 at a 10-year low relative to the U.S.

Overseas Growth Data Is Strengthening

Source: Bloomberg.

The Purchasing Managers’ Indices (PMI), a survey indicator of economic health, all remain strong with strength in both manufacturing PMI and services PMI.

Source: Bloomberg.

The Citi Economic Surprise Index for Europe shows great promise. Anything above zero means final key market data are above expectations, which has been occurring in Europe since around October of 2016.

Source: Bloomberg.

Industrial production in Europe, measured by the industrial production index, is at the highest level in five years.

Source: Bloomberg.

Producer prices in the world’s second-largest economy remain strong relative to where they’ve been over the last decade.

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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 our literature center. 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.