Mind the Gap–Diversifying Across Countries
In the first half of 2025, developed markets outside the US returned 19.0%, outperforming the US and emerging markets. But that outcome masks the wide range of returns across individual countries, from Spain’s 43.0% to Denmark at -5.5%. This kind of dispersion isn’t unusual—it’s a defining characteristic of global investing.
On average, the difference in return between the best- and worst-performing country exceeded 43% over the past ten calendar years. It’s no wonder investors may be tempted to chase recent winners or avoid losers. However, there’s little evidence that timing strategies consistently pay off. Country returns can turn quickly. For example, Canada posted the worst returns in 2015, down over 24%, but was the top performer in 2016, up over 24%. An investor who lost patience at the end of 2015 potentially missed out on the subsequent market recovery.
Country volatility is a normal part of global investing. Fortunately, as 2025 illustrates, investors in a globally diversified portfolio can benefit from international diversification without risking getting on the wrong side of country swings.