After a strong year for international stocks in 2025, I’m getting more client questions about increasing the percentage of International in their portfolios.
Many foreign stock funds saw double-digit returns, and the financial media (who are paid to get you riled up, not be a better investor!) is abuzz about “the comeback of international investing.” That excitement is leading more people to look overseas again—but is that real strategy or just chasing returns?
For several years, U.S. stocks dominated the headlines and portfolios. Big tech firms and the S&P 500 were hard to beat. Meanwhile, international markets, especially in Europe and Asia, lagged behind. But in 2025, the script flipped a bit: strong economic growth in emerging countries, strength in the eurozone, and favorable currency movements made foreign markets shine again.
It’s no surprise that investors are paying attention. Unfortunately, history shows that when one sector or region does well, money often follows too late. This pattern—buying what recently performed best and ignoring what lagged—is known as “performance chasing.” It feels logical in the moment (“Let’s buy what’s winning!”), but it’s usually dangerous. Markets move in cycles, and the best returns often come from investing before recovery, not after.
Rather than reacting to last year’s winners, smart investors use the international comeback as a reminder to stay diversified. A balanced portfolio includes both U.S. and international exposure because different economies grow at different times. When the U.S. slows down, overseas holdings can sometimes carry the load—and vice versa.
So, how much international stock is right? That depends on your overall risk level and time horizon. There’s no single perfect number, here are some guidelines.
- Aggressive portfolios: Around 15%-20% in international funds. Aggressive investors can handle more volatility, and global exposure may help long-term growth.
- Moderate portfolios: Around 10% – 15% in international. This strikes a balance between growth and stability, with most exposure still in the U.S.
- Conservative portfolios: Around 5% – 10% in international. The focus here is on income and preservation, so foreign holdings remain limited but still present for diversification.
International investing isn’t a trend—it’s an essential part of a well-built portfolio. The renewed interest after 2025’s strong results isn’t wrong by itself, but it should come from long-term planning, not FOMO.
Great investors know that discipline, not excitement, is what builds lasting wealth. Keeping a steady allocation—rebalanced once or twice a year—is usually far better than chasing the next global hotspot.
