What Are The Best Performing International Stock Markets?

It is very common for investors to own securities mostly or entirely from the country they live in. This is known as home bias. For investors living in the U.S., this has worked out quite well historically, while it may have been less lucrative for those living in other regions. However, the U.S. stock market is only valued at 55.9% of the total world equity market as of January 2021, so even U.S. investors may be missing out on opportunities abroad. International stocks also provide significant diversification benefits since international markets are often not tightly correlated with the U.S. market. How much of your portfolio should be in international securities is up for debate. Opinions range from 0% to 50%, but most advisors suggest between 15% to 25%. The easiest way to gain exposure to international markets is through international equity exchange-traded funds (ETFs), which provide diversified exposure to a particular region of interest. To determine how different markets around the world have performed over the past 5-10 years, I looked up ETF performance for each international market using an ETF comparison tool.

Stock market performance by region

Regional ETF performance from March 2011 to March 2021.
RegionETF1 mth3 mths1 yr3 yrs5 yrs10 yrs
U.S.VTI-1.91%4.93%68.00%16.96%16.46%13.72%
Asia/PacificVPL-2.74%4.30%57.55%7.50%11.06%6.64%
CanadaEWC0.86%9.01%73.84%10.10%10.32%2.37%
EuropeVGK-0.94%3.67%57.16%6.27%8.91%5.40%
AfricaAFK-6.28%0.68%71.57%-3.14%5.01%-1.35%
Latin AmericaILF-5.95%-8.53%56.64%-7.42%4.41%-4.06%
Regional ETF performance over the past 1 month, 3 months, 1 year, 3 years (annualized), 5 years (annualized), and 10 years (annualized) as of March 2021. Regions are sorted by 5-year return.

As you can see, the U.S. stock market has far outperformed international markets over the long term, more than doubling the annualized performance of the next highest performing market over the last 10 years. Whether this will continue in the future is impossible to know. Remember that past performance is no guarantee of future returns. This is not to say that foreign markets have not performed decently as well. Over the last 5 years, both Asian/Pacific markets and the Canadian market have produced quite respectable returns over 10% annualized. On the other hand, African and Latin American markets have significantly underperformed, actually providing negative returns over the last 10 years.

Now that we have looked at broader regions, let’s take a look at the stock market performance of individual countries within these regions.

Asia/Pacific

RegionETF1 mth3 mths1 yr3 yrs5 yrs10 yrs
Asia/PacificVPL-2.74%4.30%57.55%7.50%11.06%6.64%
TaiwanEWT-4.53%10.88%79.92%18.67%18.46%9.46%
ChinaGXC-12.00%1.31%43.45%7.16%15.31%7.14%
New ZealandENZL-5.74%-8.39%45.64%10.78%13.22%12.49%
South KoreaEWY-4.42%4.69%97.80%7.71%12.67%5.02%
IndiaINDA-3.37%7.33%93.36%9.61%11.48%5.04%
JapanEWJ-2.85%3.94%45.01%7.20%10.33%6.60%
Hong KongEWH-5.10%7.30%38.54%4.18%9.57%6.59%
AustraliaEWA-4.88%2.51%74.53%8.17%9.44%4.23%
ThailandTHD0.95%4.55%58.12%-4.14%6.35%4.73%
VietnamVNM-3.33%4.00%66.93%-1.49%5.72%-1.31%
SingaporeEWS2.18%7.34%43.48%-0.35%4.62%1.95%
IndonesiaEIDO-6.67%-4.05%78.47%-3.66%0.92%-1.24%
MalaysiaEWM-0.62%-4.77%32.07%-5.20%-1.30%-1.45%
PhilippinesEPHE-4.40%-11.74%50.61%-4.22%-3.70%3.26%
PakistanPAK0.33%5.99%51.19%-12.39%-5.73%
Asian/Pacific ETF performance over the past 1 month, 3 months, 1 year, 3 years (annualized), 5 years (annualized), and 10 years (annualized) as of March 2021. Countries are sorted by 5-year return below the ETF for the region.

The Asia/Pacific region is home to some of the fastest growing economies in the world, so it is no surprise that many of these countries have stock markets that have performed quite well over the last 5-10 years. Of particular note is New Zealand. For 10-year performance, New Zealand’s stock market is second only to the U.S., with an annualized return of 12.49%. China, Taiwan, and Japan have also had well-performing stock markets over the long run. Taiwan’s stock market even beat the 5-year return of the U.S. stock market at an annualized 18.46% compared to 16.46%. On the other side of the spectrum, the stock markets of several countries have performed quite poorly, in particular Malaysia and Pakistan.

Europe

RegionETF1 mth3 mths1 yr3 yrs5 yrs10 yrs
EuropeVGK-0.94%3.67%57.16%6.27%8.91%5.40%
NetherlandsEWN-1.12%8.28%82.42%14.89%15.53%9.33%
DenmarkEDEN-2.61%-2.97%76.48%13.35%13.11%
RussiaERUS-1.75%2.42%45.11%7.50%13.07%-1.01%
SwedenEWD2.40%11.44%91.48%14.43%13.06%6.96%
FinlandEFNL-3.04%2.03%72.51%7.05%11.52%
SwitzerlandEWL0.77%1.60%37.94%12.04%11.21%8.20%
NorwayNORW-0.31%9.46%93.02%3.54%10.26%1.34%
FranceEWQ-1.09%3.28%55.65%5.95%10.16%5.14%
AustriaEWO-0.85%11.05%70.05%-2.36%10.03%1.75%
ItalyEWI1.54%5.23%57.34%2.73%8.53%1.03%
IrelandEIRL3.54%6.73%94.06%7.14%8.25%11.50%
GermanyEWG0.09%2.86%62.74%4.04%7.97%4.92%
GreeceGREK5.03%1.99%58.49%-1.23%6.38%
BelgiumEWK0.57%2.80%48.25%1.06%5.78%6.77%
PortugalPGAL0.46%0.61%46.57%0.37%5.55%
UKEWU-2.50%4.79%44.40%0.64%3.99%2.48%
SpainEWP-1.57%-0.45%40.78%-1.85%3.42%-0.41%
PolandEPOL-8.58%-6.75%38.51%-9.31%0.17%-4.11%
TurkeyTUR-15.63%-6.35%23.52%-14.40%-8.49%-7.23%
European ETF performance over the past 1 month, 3 months, 1 year, 3 years (annualized), 5 years (annualized), and 10 years (annualized) as of March 2021. Countries are sorted by 5-year return below the ETF for the region.

European stock markets have been mixed overall over the past 10 years. The table above is ranked by 5-year performance since a number of the ETFs have not been around for a full 10 years. For 5-year returns, only Turkey had a negative return. However, beyond 5 years, the stock markets of many countries have provided a minimal to average return at best. The top performers over the long run have been the Netherlands, Denmark, Ireland, and Switzerland.

Africa/Middle East

RegionETF1 mth3 mths1 yr3 yrs5 yrs10 yrs
AfricaAFK-6.28%0.68%71.57%-3.14%5.01%-1.35%
Saudi ArabiaKSA3.11%8.36%55.30%8.02%11.45%
IsraelEIS-3.11%1.91%52.94%9.79%7.97%3.10%
South AfricaEZA-4.64%629%83.58%-5.43%3.96%0.04%
QatarQAT4.35%-0.48%24.45%7.48%2.72%
UAEUAE2.38%10.19%48.12%-2.77%-0.08%
EgyptEGPT-10.44%-1.48%26.79%-11.23%-7.52%-6.85%
NigeriaNGE1.43%10.03%47.57%-14.23%-10.15%
African/Middle Eastern ETF performance over the past 1 month, 3 months, 1 year, 3 years (annualized), 5 years (annualized), and 10 years (annualized) as of March 2021. Countries are sorted by 5 year return below the ETF for the region.

Stock markets in Africa and the Middle East have not performed well overall during the past 10 years. Only Israel and Saudi Arabia have provided positive returns since their respective ETFs inceptions. Over the past 5 years, Saudi Arabia’s stock market actually had a decent return, the 12th highest of all 49 countries with available ETFs. On the other hand, Nigeria’s stock market had the worst 5-year performance of any country.

Latin America

RegionETF1 mth3 mths1 yr3 yrs5 yrs10 yrs
Latin AmericaILF-5.95%-8.53%56.64%-7.42%4.41%-4.06%
PeruEPU-12.83%-1.75%63.01%-4.70%8.04%-1.10%
BrazilEWZ-7.49%-13.33%40.45%-7.47%7.07%-5.71%
ChileECH0.12%12.24%80.94%-11.45%0.70%-5.61%
ColombiaICOL-2.66%-6.26%74.30%-8.61%-1.37%
MexicoEWW0.90%0.90%62.03%-3.01%-2.00%-1.80%
ArgentinaAGT-7.45%-5.83%79.97%-5.71%
Latin American ETF performance over the past 1 month, 3 months, 1 year, 3 years (annualized), 5 years (annualized), and 10 years (annualized) as of March 2021. Countries are sorted by 5-year return below the ETF for the region.

Stock markets in Latin America have performed quite poorly over the long term. No country’s stock market has had a positive return if you look beyond 5 years. Even at 3 years, there are no positive returns. The only bright spots are the 5-year annualized performances of Peru and Brazil, which have been fairly average.

Conclusion

It can be difficult to get past the home bias, particularly if the stock market of your home country has been performing well, but to truly diversify your portfolio, you should consider holding securities from other countries as well. There is no saying what the future holds, and it could be beneficial to avoid tying your financial success too tightly to one particular location. As we have seen above, there are a number of countries with healthy, well-performing stock markets over the long term, or if you prefer, there are many possibilities to buy low if you believe a particular country could grow significantly in the future. Ideally, look for regional ETFs that are not correlated too strongly to your own country’s stock market, as this provides the best advantages for diversification.

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