On April 2, the US announced wide-ranging tariffs on imports from most of the world’s countries, postponed some of them until July, and opened individual negotiations with many trading partners. With the resulting uncertainty clouding the future of the global economy, this may seem an unlikely time for individual US investors to look abroad for opportunities.
However, Fidelity’s Asset Allocation Research Team says diversifying your portfolio with international stocks may be more important now than ever. That’s because after decades during which the US led the way toward global economic integration, a new order may be emerging where individual countries’ economies and markets may deliver a far wider set of investment opportunities than before.
So far in 2025, markets have provided a vivid example of why diversification is important. While the S&P 500 has been volatile and is flat so far in 2025, the MSCI ACWI ex. US Index, which tracks global stock markets excluding the US, is up by double digits for the year. Past performance is no guarantee of future returns, but the difference in performance between US and international stocks this year is a reminder not to put all your eggs in one basket.
Finding value
Recently, international stocks have offered more attractive valuations than US stocks, which remain expensive despite the year-to-date decline. That’s because the US enjoyed stronger economic growth and attracted more investment—much of it from abroad—than have other countries over the past decade. During much of that time, sluggish growth and geopolitical risks weighed on international stock prices.
Now, a US economic slowdown may lie ahead and stock prices could potentially decline as they have historically during recessions. By contrast, other major economies have begun to grow again as they emerge from recession and enter the phase of the business cycle when stock prices have historically risen.
Many international stocks now trade at prices that may not reflect their potential for delivering attractive returns in the future. Even after the announcement of tariffs, emerging-market (EM) stocks remain deeply discounted relative to US stocks and are near historical lows. This may make it a good time for investors to think about adding international exposure to their portfolios.

The long-term case for international stocks
International stocks’ recent low prices are not by themselves a reason to invest. There are, however, fundamental factors that are making them more attractive and are likely to continue to do so into the future. In fact, Fidelity's Asset Allocation Research Team (AART) expects non-US stocks to outperform US stocks in the years ahead.
Investing in emerging-markets consumers
The biggest long-term investment opportunities over the next 20 years may come from the continuing increase in demand from consumers in EM countries, who are forecast to be the major source of economic growth and profits for companies over that time, according to AART. EMs are expected to grow to comprise about half of global gross domestic product in 20 years, compared with about 40% now and 25% 20 years ago. That's because they have relatively young and growing populations whose incomes will rise as their economies grow. India, for example, already boasts a greater number of households with disposable income of more than $10,000 than does Japan.
Sam Polyak, who manages the emerging-markets sleeve of Fidelity® Total International Equity Fund (
Polyak also says the impact on China of US tariffs may be less severe than might be expected. He says that tariffs are prompting stimulus measures from China, which could potentially boost a wide range of Chinese stocks.
For now, Polyak still believes there are some great deals to be had among Chinese stocks. He says, "China is home to some of the world's most innovative social media, e-commerce, health care, and automation companies, so they’re difficult to ignore when shares of these businesses are trading at what I consider extreme bargains. Many of these are consumer-driven companies that are taking business away from US-listed multinationals."
Bill Kennedy, manager of Fidelity® International Discovery Fund (
As an example, he points to MercadoLibre, the largest online marketplace in Latin America. “The Uruguay-based firm excels in both sourcing and selling products in a region where volatile currency often challenges many global competitors,” Kennedy says.
While consumer spending growth may be the biggest driver of opportunity in EM stocks, it’s not the only one. Rising debt in the US also makes a potentially compelling case for investing in EMs. Polyak says, “The significant increase in US debt has led to a weaker US dollar, which is motivating investors to seek opportunities elsewhere, particularly in EMs.”
Opportunities in developed markets
While EMs may present the most attractive investment opportunity for those looking to venture outside the US, stocks of high-performing companies listed in Europe, Japan, and other developed markets (DMs) may also be increasingly attractive.
DM stocks such as those of European companies have experienced lower prices than the US partly because European Union countries have experienced slower growth. But unlike the US, where the Federal Reserve has kept interest rates steady since December, the European Central Bank, Bank of England, and Bank of Canada have all been cutting rates. Households and businesses in DMs such as Europe and Canada tend to be more sensitive than the US to changes in interest rates, and they are likely to benefit from rate cuts which may lift stock prices.
Bill Bower, manager of the Fidelity® Diversified International Fund (
For his part, Kennedy likes European luxury goods companies which deliberately keep their products scarce and prices high, helping the business to thrive, irrespective of consumer spending trends. These include Hermes International, one of the world’s largest and most admired makers of upscale luggage, apparel, and accessories and Italian sports car manufacturer Ferrari which produces fewer cars than it could sell, creating a perception of brand exclusivity and driving demand.
Jed Weiss, who manages Fidelity® International Small Cap Opportunities Fund (
Weiss says another critical change is the reduction in the number of publicly traded companies holding shares in other publicly traded firms, which frees up cash for them to buy back their own stock or pursue other shareholder-friendly activities, a potential game-changer, in his view. “I’m eager to capitalize on reform-driven investment opportunities as they arise,” he says.
For specific fund information, including full holdings, please click on the fund trading symbols above.
Understanding the risks
While international stocks are attractively priced right now, international investing does come with risks. Those include changes in currency values and political risks posed by governments.
EMs have been defined as places where the actions of government policymakers may matter to investors at least as much as the rising and falling of the business cycle. That has meant that investing in them involved greater political, social, economic, and regulatory risks than investing in more-developed markets.
EM stocks no longer hold a monopoly on policy risk, but they are still likely to be potentially more volatile and less liquid than stocks from developed markets.
Investors should also keep in mind that the EM category contains a wide variety of companies operating in very dissimilar countries from South Africa to South Korea. The countries that are grouped within the same EM indexes may present very different opportunities and risks to investors. This makes both careful security selection by experienced managers and diversification within portfolios important for spotting opportunity while avoiding undue risk.
Active management by experienced professional investors can help manage the risks of investing internationally, especially given the uncertainty around trade and tariff policies. Bower says that in this environment, “We just need a new set of guidelines and rules that everyone plays by. I think that will eventually happen, but it’s painful waiting for it. But uncertainty is what creates opportunity, and the stocks are giving you an opportunity to get paid for having faith that things will eventually work out.”
Researching ideas
Those who want to invest outside the US can get professionally managed exposure through mutual funds, ETFs, and managed account solutions. You can run screens using the Mutual Fund Evaluator and ETF/ETP Screener on Fidelity.com. Here are some ideas from screens for international stocks as of May 12, 2025. Results are for screens for international equity mutual funds and international equity ETFs.
International mutual funds
- Fidelity® Series Emerging Markets Opportunities Fund (
) - Fidelity® Diversified International Fund (
) - Fidelity® International Value Fund (
)
International ETFs
- Fidelity® Emerging Markets Multifactor ETF (
) - SPDR® Portfolio Emerging Markets ETF (
) - iShares Global 100 ETF (
) - iShares China Large-Cap ETF (
)