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Index Funds · International Investing · Market Performance · Trade Wars
International index funds have significantly outperformed their U.S. counterparts in early 2025, driven by escalating trade tensions and a reevaluation of market valuations.
The U.S. S&P 500 declined by approximately 6% and the Nasdaq 100 slid over 8.1% in the year's first quarter, largely attributed to President Trump's imposition of tariffs on key trading partners like Canada, China, and the EU. In stark contrast, the EURO STOXX 50 index surged 11%, signaling a notable shift in investor focus towards developed international markets. Experts highlight that U.S. stocks have historically traded at higher price-to-earnings ratios, which are now shrinking, prompting investors to reconsider strategies.
Adding international stocks can dampen portfolio volatility, improve returns, and mitigate currency risks. Fidelity International Index Fund (FSPSX), with a low expense ratio of 0.035% and a five-year average return of 12.14%, is highlighted as a strong contender, ranking 2nd on a list of best international index funds.
FSPSX primarily invests in the MSCI EAFE, with significant exposure to the Eurozone, Japan, and sectors like financial services and industrials.
