Has the US Market Performed Well Because It's Business Friendly?
Many US investors question allocating to non-US stocks because the US market has performed so strongly for more than a decade. From January 2010 through December 2023, the S&P 500 Index returned 13.12%, beating the MSCI All Country World ex USA Index by an annualized 8.5 percentage points.
The history of country market performance says investors shouldn’t count on one country’s market remaining on top. But some investors look for stories supporting why the US is different and might continue its dominance. One increasingly popular belief is that the US is particularly friendly to businesses, attracting the best proprietors and subsequent innovation.
The premise that the US leads the way in business friendliness is up for debate. The Heritage Foundation’s business freedom scores rank countries on subjective criteria like regulatory environment, business risk, and access to electricity. The US ranked 13th out of 22 developed countries in 2023.1