The US stock market is the biggest in the world2, but investors who ignore other global markets may miss out on a wealth of opportunity.
Investing in multiple countries can deliver more reliable outcomes over time, helping investors stay on track toward achieving their long-term goals.
- Stocks of the roughly 17,500 companies trading outside the US represent nearly half of the world’s $74 trillion equity market.
- When determining where to invest, a country’s size, population, or gross domestic product may not be a primary consideration. Japan, for instance, is relatively small in landmass but accounts for 7% of the world’s equity market value, representing more than 2,600 companies, including familiar names like Toyota and Sony. Even a tiny country like Switzerland is home to publicly traded giants like Nestlé and two of the world’s biggest pharmaceutical firms.
- A strategy focused on global diversification captures returns from thousands of companies around the globe and can potentially offset weak performance in one market with stronger returns elsewhere.
- In USD. Market cap data is free-float adjusted and meets minimum liquidity and listing requirements. Dimensional makes case-by-case determinations about the suitability of investing in each emerging market, making considerations that include local market accessibility, government stability, and property rights before making investments. China A-Shares that are available for foreign investors through the Hong Kong Stock Connect program are included in China. 30% foreign ownership limit and 25% inclusion factor are applied to China A-Shares. Many nations not displayed. Totals may not equal 100% due to rounding. For educational purposes; should not be used as investment advice. Data provided by Bloomberg. Diversification neither assures a profit nor guarantees against loss in a declining market.
- Based on the total value of shares issued by all publicly traded companies, calculated as share price times the number of shares outstanding.