Does Your Portfolio Look Like 1960 or 2025?
Putting Some Asia into Your Portfolio

As residents of the U.S., we’ve been fortunate to invest in one of the strongest equity markets in the world — and often haven’t needed to look elsewhere for long-term returns. But at the time of this writing in 2025, international markets have shown compelling year-to-date performance: the S&P 500 is up approximately 8%, while broad large-cap indexes in Europe and China have returned closer to 20% and 24%, respectively.¹

Is this short-term outperformance just a reflection of market volatility — or could it signal a broader shift worth paying attention to?

According to a recent white paper from Fidelity², China and the Eurozone are currently in the early stages of the business cycle, with economic activity rebounding and corporate profits starting to grow. Japan is seen as in the mid-cycle stage, while the U.S. and much of the developed world are in the late cycle, with moderating growth and earnings pressures.

You can find Fidelity’s full white paper here.²

Why Consider Investing Internationally?

Diversification
Regional diversification may help reduce portfolio volatility by spreading exposure across different economies, sectors, and political environments.

Global Growth Opportunities
While the U.S. economy makes up about 26% of global GDP, that means roughly 74% of the world’s economic activity occurs overseas.³ Economies like China and India are experiencing growing incomes, innovation, and — in many cases — lower national debt burdens than the U.S. For example, China has led the world in patent filings in recent years.⁴

Currency Effects
Currency fluctuations can introduce both risk and opportunity. When foreign currencies strengthen relative to the U.S. dollar, returns from international investments may be amplified for dollar-based investors. In 2025, the dollar has weakened by roughly 10% year-to-date, boosting returns from international holdings.¹

Offset Domestic Risk
Domestic political, environmental, or economic events can impact U.S.-only portfolios. As one example, the current U.S. administration is pursuing industrial policy through tariff changes, while China has increased its number of bilateral investment treaties — signaling differing global economic strategies. Exposure to multiple economies may help mitigate concentrated risks.

Institutional Investors Already Think Globally
Major firms like Fidelity, Schwab, and T. Rowe Price allocate significantly more to international equities in their target-date funds than the average individual investor typically does.

For example, Fidelity’s allocates approximately 36.27% to international equities.⁵ That includes:

• Developed Europe: ~14%
• Japan: ~4.5%
• Asia Developed: ~4.6%
• Asia Emerging: ~7.1% (which includes China)

By comparison, T. Rowe Price and Schwab target-date funds of the same vintage allocate 28.4% and 26.13%, respectively, to international stocks.⁵
This suggests that professional asset managers are comfortable making their portfolios look more like today’s global economy than many retail investors may be.

Consider This:

• Taiwan is home to some of the world’s most important microchip foundries.
• China files more artificial intelligence patent applications than any other country.⁴
  In 2024, China sold over 10 million more cars than the U.S. — 26.05 million vs. 15.94 million.⁶
• Europe has begun easing interest rates, supporting new economic growth.

There are many valid reasons to invest in the U.S., and home bias is understandable. But it’s also worth recognizing that the U.S.’s share of global GDP has changed — from 40% in 1960 to approximately 26% today.³ China now represents nearly 20% of global GDP on its own.

According to the International Monetary Fund, global GDP is projected to grow 3.0% in 2025 and 3.1% in 2026.⁷ Not all of that growth will happen here at home. It might be time to revisit how much of your portfolio reflects today’s global opportunity — and how much is still stuck in 1960.

Disclosures
This material is for informational purposes only and is not intended as investment advice or a recommendation to buy or sell any specific securities. International investing involves additional risks, including currency fluctuations, political instability, and differing regulatory environments. Past performance is not a guarantee of future results. Investors should consult with a financial professional to determine whether any investment strategy aligns with their goals, risk tolerance, and time horizon.

Sources

1. Index performance data as of July 2025, approximate and subject to change.
2. Fidelity Institutional: “Fidelity Business Cycle Update: July 2025.”
3. Visual Capitalist: “U.S. Share of Global Economy Over Time.”
4. World Intellectual Property Organization (WIPO), Global Innovation Index, 2024.
5. Morningstar Fund Data, July 2025.
6. Statista: Global Car Sales by Country, 2024.
7. IMF World Economic Outlook, April 2025.