STRATEGIC TIME HORIZON SUPPORTS ALLOCATION TO NON-U.S. EQUITIES
Thomas Shipp, CFA, Head of Equity Research, LPL Financial
With investor focus now squarely back on U.S. equities as new all-time highs are in sight, we dig into why strategic allocations should still consider, despite recent outperformance and multiple expansion, diversification into international equities. Using a five-factor attribution analysis, we analyze the drivers of returns for U.S. and non-U.S. equities over the last quarter century, with a particular focus on what drove the U.S. to outperform non-U.S. equities so dramatically over the last 15 years. We then use that same analytical framework to create an illustrative scenario analysis to determine potential returns to U.S. and non-U.S. equity markets, showing why starting valuations matter — when looking far into the future.