Redirection Confirmation

You'll be re-directed to the Financial Professional site.

For Financial Professionals

Important Legal Information: By clicking “I agree” you are confirming you are a Financial Professional and that you are aware the website you will enter is intended for a professional investor, not the general public.

Before continuing, please read the following important information and agree to these provisions and the Terms & Conditions of Use of this website for Financial Professionals.
 

TERMS & CONDITIONS OF USE

Use of the Dodge & Cox website ("Site"), owned and operated by Dodge & Cox®, signifies that you accept the following Terms of Use. Nothing contained in these Terms of Use is intended to modify or amend any other written agreement, if any, that may currently be in effect between you and Dodge & Cox or any funds managed by Dodge & Cox. Dodge & Cox may periodically modify these Terms of Use, and any such modifications will be effective immediately upon posting. We suggest that you periodically check these Terms of Use for modifications. If you do not agree to the Terms of Use, do not use this Site.

We suggest that you check the Terms of Use periodically for changes. The Terms of Use can be accessed from the link at the bottom of the Site pages. Dodge & Cox expressly reserves the right to monitor any and all use of this Site, without liability.


PRIVACY

Dodge & Cox expressly reserves the right to monitor any and all use of this Site; any such monitoring will be used for Dodge & Cox’s internal business purposes without liability. Dodge & Cox is committed to maintaining the confidentiality, integrity, and security of your personal and financial data. We consider this information to be private and held in confidence between you and Dodge & Cox. We would like you to know about our policies to protect the privacy of this information.

We may collect personal information about you from:

  • You or your representative in writing, electronically or by phone (e.g., in account applications or requests for forms or literature);
  • Transactions initiated by you or made on your behalf; and
  • Information we receive from third parties, such as financial advisers, consumer reporting agencies, consultants and custodians.

We do not disclose personal information about current or former clients or shareholders to any third parties except as necessary to effect a transaction, administer your account, or as otherwise permitted by law. For example, the Dodge & Cox Funds and Dodge & Cox Worldwide Funds use third-party transfer agents and third-party providers of systems who use your information only to process or analyze transactions you have requested. Contracts with these organizations contain provisions restricting their use of your personal information to those purposes for which they were hired.

We restrict access to personal information about you to those employees and service providers involved in administering or servicing your account(s) or helping us meet our regulatory obligations. We maintain physical, electronic, and procedural safeguards that comply with federal standards to protect your personal information. In addition, our Code of Ethics, which applies to all Dodge & Cox employees, restricts the use of your personal information.

For more information about privacy, please read the Dodge & Cox Privacy Policy.

LIMITED LICENSE AND RESTRICTIONS ON USE

Dodge & Cox grants you a limited, revocable, nonexclusive, nontransferable license to view, store, bookmark, download, and print the pages within this Site solely for your personal, informational, and noncommercial use or as expressly authorized by Dodge & Cox in writing. You are responsible for obtaining and maintaining all equipment, services, and other materials that you need to access this Site. Dodge & Cox reserves all rights not expressly granted in these Terms of Use. Except as otherwise stated in these Terms of Use as expressly authorized by Dodge & Cox in writing, you may not:

  • Modify, copy, distribute, transmit, post, display, perform, reproduce, publish, broadcast, license, create derivative works from, transfer, sell, or exploit any reports, data, information, content, software, RSS and podcast feeds, products, services, or other materials on, generated by or obtained from this Site, whether through links or otherwise (collectively, "Materials");
  • Redeliver any page, text, image or Materials on this Site using "framing" or other technology;
  • Engage in any conduct that could damage, disable, or overburden (i) this Site, (ii) any Materials or services provided through this Site, or (iii) any systems, networks, servers, or accounts related to this Site, including without limitation, using devices or software that provide repeated automated access to this Site, other than those made generally available by Dodge & Cox;
  • Probe, scan, or test the vulnerability of any Materials, services, systems, networks, servers, or accounts related to this Site or attempt to gain unauthorized access to Materials, services, systems, networks, servers, or accounts connected or associated with this Site through hacking, password or data mining, or any other means of circumventing any access-limiting, user authentication or security device of any Materials, services, systems, networks, servers, or accounts related to this Site;
  • Modify, copy, obscure, remove or display the Dodge & Cox, Dodge & Cox Funds, or Dodge & Cox Worldwide Funds name, logo, trademarks, text, notices, or images without Dodge & Cox’s express written permission. To obtain such permission, you may e-mail us at website@dodgeandcox.com; or
  • Include the term "Dodge & Cox®," or any Dodge & Cox trademark or executive's name, or any variation of the foregoing, as a meta-tag, hidden textual element, or any other indicator that creates an impression of affiliation, sponsorship, or endorsement by Dodge & Cox.

COPYRIGHT POLICY, NOTICE AND CLAIM INFORMATION

Dodge & Cox owns and operates this Site. All Materials on this Site, whether separate or compiled, including but not limited to, text, graphics, and audio clips. Logos, buttons, images, digital downloads, data compilations, software, icons, html code and xml code, as well as all copyright, patent, trademark, trade dress, and other rights therein, are owned or licensed by Dodge & Cox® and its third-party information providers, and are protected by United States and international intellectual property laws.

Pursuant to Section 512(c)(2) of the U.S. Copyright Revision Act, as enacted through the Digital Millennium Copyright Act, Dodge & Cox designates an agent as described below to receive notifications of claimed copyright infringement by mail: 
Roberta R. Kameda, Esquire, General Counsel, Dodge & Cox, 555 California Street, 40th Floor, San Francisco, CA 94104.

The designated copyright agent can also be reached by telephone at (800) 254-8494, by fax at (415) 986-1369, and by e-mail at website@dodgeandcox.com.


LINKING CONDITIONS

You may not link to this Site unless you comply with these linking conditions ("Linking Conditions"). Dodge & Cox grants you a limited, revocable, nonexclusive right to create a hyperlink to this Site ("Link"), provided you comply at all times with the following conditions:

  • The Link must be made to the Funds' home page at www.dodgeandcox.com.
  • The text of the Link must read either “Dodge & Cox”, “Dodge & Cox Funds”, “Dodge & Cox Worldwide Funds”,  or dodgeandcox.com. You may not use any Dodge & Cox logo or graphic or any other Dodge & Cox trademark, as part of the Link without Dodge & Cox's express written permission; and 
  • The Link and surrounding context on the linking site must not: (a) falsely represent or misrepresent any relationship between the linking site and Dodge & Cox, including suggestions of affiliation, endorsement, or sponsorship; (b) portray Dodge & Cox or its affiliates or their products or services, in a false, misleading, derogatory, or otherwise offensive manner; or (c) deliver the Materials in a framed environment or alter the layout, content, look, or feel of the Site.

If you have created a Link that conforms to these Linking Conditions, then you also may include one or more Links to any internal or subsidiary page of this Site that is located one or several levels down from the homepages (known as "deep links"), provided, however, that all such deep links must be in close physical proximity to the Link that conforms to the Linking Conditions. You may not maintain numerous or pervasive Links to this Site.

DATA, INFORMATION AND CONTENT

The Materials on this Site are for information, education, and noncommercial purposes only. Although Dodge & Cox may provide data, information, and content relating to investment approaches and opportunities to buy or sell securities and/or mutual funds, you should not construe any such information or other content available through this Site as legal or tax advice. You alone will bear the sole responsibility of evaluating the merits and risks associated with the use of any Materials on this Site before making any decisions based on such Materials. In exchange for using such Materials, you agree not to hold Dodge & Cox or its affiliates and their directors (trustees), officers, employees, or third-party information providers liable for any possible claim for damages arising from any decision you make based on the Materials made available to you through this Site. By providing access to other websites, neither Dodge & Cox nor any of its affiliates is recommending the purchase or sale of the stock issued by any company, nor are they endorsing services provided by any website's sponsoring organization.

OWNERSHIP OF OTHER MATERIALS

All trademarks, service marks, and logos appearing on this Site are the exclusive property of their respective owners.

All Dodge & Cox graphics, logos, page headers, and service names are trademarks, service marks, or trade dress of Dodge & Cox. Dodge & Cox's trademarks, service marks and trade dress may not be used in connection with any product or service that is not Dodge & Cox's, in any manner that is likely to cause confusion among customers or investors, or in any manner that disparages or discredits Dodge & Cox. Nothing contained on this Site should be construed as granting any license or right in or to any trademarks, service marks, or trade dress of Dodge & Cox.


THIRD-PARTY CONTENT

Data and other materials appearing on this Site that are provided by third parties are believed by Dodge & Cox to be obtained from reliable sources, but Dodge & Cox cannot guarantee and is not responsible for their accuracy, timeliness, completeness, or suitability for use. Dodge & Cox is not responsible for, and does not prepare, edit, or endorse, the content, advertising, products, or other materials on or available from any website owned or operated by a third party that is linked to this Site via hyperlink. The fact that Dodge & Cox has provided a link to a third party's website does not constitute an implicit or explicit endorsement, authorization, sponsorship, or affiliation by Dodge & Cox with respect to such website, its owners, providers, or services.  You will use any such third-party content at your own risk.
 

WARRANTY DISCLAIMERS

YOU EXPRESSLY UNDERSTAND AND AGREE THAT:

THERE ARE NO IMPLIED OR EXPRESSED WARRANTIES ON THE MATERIALS IN THIS SITE; THE MATERIALS ARE PROVIDED "AS IS" AND "AS AVAILABLE BASIS." DODGE & COX, AFFILIATES, AGENTS, DIRECTORS (AND TRUSTEES), OFFICERS, EMPLOYEES, LICENSORS AND ANY THIRD-PARTY INFORMATION PROVIDERS AND VENDORS DISCLAIM, TO THE FULLEST EXTENT UNDER APPLICABLE LAW, ANY WARRANTY OF ANY KIND, WHETHER EXPRESS OR IMPLIED, AS TO ANY MATTER WHATSOEVER RELATING TO THIS SERVICE, INCLUDING WITHOUT LIMITATION THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NONINFRINGEMENT, AND ALL WARRANTIES REGARDING SECURITY, CURRENCY, CORRECTNESS, QUALITY, ACCURACY, COMPLETENESS, RELIABILITY, PERFORMANCE, TIMELINESS, OR CONTINUED AVAILABILITY, WITH RESPECT TO (I) THE SITE; (II) ANY MATERIALS, PRODUCTS, OR SERVICES AVAILABLE ON OR THROUGH THE SITE; (III) USE OF THE SITE, MATERIALS, PRODUCTS, OR SERVICES; AND (IV) THE RESULTS OF THE USE OF THE SITE, MATERIALS, PRODUCTS, OR SERVICES. FURTHER, DODGE & COX, AFFILIATES, DIRECTORS (AND TRUSTEES), OFFICERS, EMPLOYEES, AGENTS, LICENSORS, AND ANY THIRD-PARTY INFORMATION PROVIDERS AND VENDORS EXPRESSLY DISCLAIM ALL WARRANTIES WITH RESPECT TO ANY DELAYS OR ERRORS IN THE TRANSMISSION OR DELIVERY OF ANY MATERIALS, PRODUCTS, OR SERVICES AVAILABLE THROUGH THIS SITE. EXCEPT AS PROVIDED BY LAW, NEITHER DODGE & COX NOR ITS THIRD-PARTY INFORMATION PROVIDERS AND VENDORS HAS ANY RESPONSIBILITY TO MAINTAIN THE MATERIALS, PRODUCTS, OR SERVICES OFFERED ON THE SITE OR TO SUPPLY CORRECTIONS, UPDATES, OR RELEASES FOR THE SAME. USE OF THIS SERVICE IS AT YOUR OWN RISK. REFERENCE TO A FUND OR SECURITY ANYWHERE ON THIS WEB SITE IS NOT A RECOMMENDATION TO BUY, SELL, OR HOLD THAT OR ANY OTHER SECURITY. IF YOU LIVE IN A STATE THAT DOES NOT ALLOW DISCLAIMERS OF CERTAIN WARRANTIES, SOME OF THE ABOVE EXCLUSIONS MAY NOT APPLY TO YOU. THIS WARRANTY GIVES YOU SPECIFIC LEGAL RIGHTS, AND MAY HAVE OTHER RIGHTS, WHICH VARY FROM JURISDICTION TO JURISDICTION.

LIABILITY AND INDEMNITY

ANY MATERIALS DOWNLOADED OR OTHERWISE OBTAINED THROUGH THIS SITE ARE DONE AT YOUR OWN RISK. YOU ARE SOLELY RESPONSIBLE FOR ANY DAMAGE TO YOUR COMPUTER SYSTEM OR OTHER EQUIPMENT, OR LOSS OF DOWNLOADED OR OBTAINED DATA THAT RESULTS FROM SUCH DOWNLOAD.

NEITHER DODGE & COX NOR ITS AFFILIATES, DIRECTORS (AND TRUSTEES), OFFICERS, EMPLOYEES, AGENTS, LICENSORS, OR ANY THIRD-PARTY INFORMATION PROVIDERS AND VENDORS WILL BE LIABLE FOR ANY DIRECT, INDIRECT, INCIDENTAL, SPECIAL, CONSEQUENTIAL, PUNITIVE, OR EXEMPLARY DAMAGES, INCLUDING BUT NOT LIMITED TO, DAMAGES FOR LOSS OF PROFITS, REVENUE, INCOME, GOODWILL, USE, DATA, OR OTHER INTANGIBLE LOSSES, OR DAMAGES CAUSED BY THEFT, UNAUTHORIZED ACCESS, SYSTEMS FAILURE, OR COMMUNICATIONS LINE FAILURE, OR THE COST OR PROCURING SUBSTITUTE GOODS OR SERVICES, CAUSED BY THE USE OF OR INABILITY TO USE THE SITE, MATERIALS OR ANY PRODUCTS OR SERVICES PROVIDED HEREIN, OR ANY OTHER MATTER RELATING TO THIS SITE, EVEN IF DODGE & COX HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. SOME JURISDICTIONS DO NOT ALLOW THE EXCLUSION OR LIMITATION OF INCIDENTAL OR CONSEQUENTIAL DAMAGES, SO THE ABOVE EXCLUSIONS OR LIMITATIONS MAY NOT APPLY TO YOU. TO THE EXTENT THAT A JURISDICTION DOES NOT PERMIT THE EXCLUSION OR LIMITATION OF LIABILITY AS SET FORTH HEREIN, THE LIABILITY OF DODGE & COX AND ITS AFFILIATES, SUBSIDIARIES, DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, LICENSORS, AND ANY THIRD-PARTY INFORMATION PROVIDERS AND VENDORS IS LIMITED TO THE EXTENT PERMITTED BY LAW IN SUCH JURISDICTIONS.

You agree to indemnify, defend, and hold harmless Dodge & Cox, its affiliates, and each of its and their officers, directors (and trustees), employees, and agents, from and against all claims, demands, liabilities, damages, losses, or expenses, including attorney's fees and costs, arising out of or related to your improper access to or use of this Site, or any violation by you of these Terms of Use.

Dodge & Cox does not claim that materials in this Site are appropriate or available for use in all locations. Because of the global nature of the Internet, you agree to comply with all local rules with respect to your online conduct, including all laws, rules, codes, and regulations of the country in which you reside and the country from which you access this Site, including without limitation, all laws, rules, codes, regulations, decrees, acts, orders, directives, legislation, bills, and statutes pertaining to tax, contracts, intellectual property, securities, e-commerce, banking, technology, computers, fraud, and privacy.

Each investment product and service referred to on this Site is intended to be made available only to persons where that product or service is registered and/or licensed for sale or where such registration or licensing is not required. This Site will not be considered a solicitation for or offering of any investment product or service to any person in any jurisdiction where such solicitation or offering would be illegal.

TIMELINESS OF CONTENT

All content on this Site is presented only as of the date published or indicated, and may be superseded by subsequent market events or for other reasons. In addition, you are responsible for setting the cache settings on your browser to ensure you are receiving the most recent data.


TERMINATION

The rights granted to you herein terminate immediately if you fail to comply with the Terms of Use. Dodge & Cox, in its sole discretion, reserves the right to temporarily or permanently terminate your access to and use of this Site at any time and for any reason whatsoever, without notice or liability. Dodge & Cox will not be liable to you or any third party for any termination of your access to or use of this Site.

INTEGRATION AND SEVERABILITY

If any provision of these Terms of Use is deemed unlawful, void, or for any reason unenforceable, then that provision will be deemed severable from these Terms of Use and will not affect the validity and enforceability of the remaining provisions. The preceding Terms of Use represent the entire agreement between Dodge & Cox and the user relating to the subject matter herein.

Terms of Use as of: February 2022

Skip to main content
 

Investment Perspectives

The Case for International Equities

May 2025

 

Key Takeaways

  • In early 2025, investor enthusiasm shifted from U.S. to international equities. The substantial valuation disparity between these markets, uncertainty about new tariff policies, and a weaker U.S. dollar contributed to this reversal.
  • International equities present a compelling long-term opportunity due to their attractive valuations, diversification benefits, distinct market exposures, and structural reforms aimed at boosting competitiveness. 
  • Skilled investors can mitigate risks and generate excess returns in international equities through fundamental research and active, value-oriented security selection. In this paper, we share a few examples of international companies we find particularly attractive.

From 2010–2024, U.S. equities outperformed international equities by 503 percentage points overall.1 International stocks outperformed in only three of those 15 years. Impressive growth from the “Magnificent Seven” stocks, a group of U.S. mega-cap technology and consumer-related companies, drove the U.S. market’s stellar returns. Robust economic growth, favorable tax policies, and a stronger U.S. dollar also boosted performance. The U.S. dollar increased 39% on a trade-weighted basis over this 15-year period, which was a major headwind for U.S. dollar-based international investors.

Based on this track record and the higher growth achieved by some innovative American companies, many investors have viewed the United States as the prime destination for superior returns. We are wary of extrapolating past performance and develop our outlook based on the relationship between fundamentals and valuation.

By the end of 2024, international equities were the cheapest they have been relative to their U.S. counterparts. While the U.S. economy started this year on solid footing, the Trump administration’s announcements of new tariffs rattled global markets and increased concerns about global economic growth, higher inflation, and the strength of the U.S. dollar. Given the deteriorating outlook and the large valuation disparity, market sentiment reversed, and international equities outperformed U.S. equities by 14 percentage points year to date through April 30.2

International companies are not shielded from these developments. We are actively evaluating trade-related impacts, retesting our investment theses for existing portfolio holdings, and adjusting portfolio exposures on a bottom-up basis as investment opportunities arise. This market environment provides active managers opportunities to identify and take advantage of mispriced stocks.

Going forward, we are optimistic about the relative long-term prospects of international equities. They remain attractively valued, offer enhanced diversification, provide a differentiated opportunity set for active managers, and could benefit from structural reforms enabling more competitiveness and shareholder orientation.

Inexpensive Relative Valuations

Starting valuations matter. History has shown they are significant drivers of long-term equity returns and that lower starting valuations are associated with higher equity returns. 

International equities are trading at a historically cheap relative valuation. At the end of 2024, the valuation gap between international and U.S. stocks was at the first percentile of historical monthly observations (see Figure 1).3 The first percentile represents a trough-level relative valuation. After tariff-related volatility, this disparity rose to the eighth percentile on April 30 but remains very compelling. 

Figure 1. International Equities Are Trading at a Large Discount to U.S. Equities

Source: FactSet, MSCI, S&P. Dodge & Cox calculated the percentiles, which are based on monthly observations since June 30, 2003.

The MSCI ACWI ex USA trades at only 13.4 times forward earnings compared to 20.9 times for the S&P 500 Index.4 At Dodge & Cox, our U.S., international, and global strategies all trade at a meaningful discount to their broader market given our active, value-oriented approach. 

This valuation discount is broad-based at the sector level; most international sectors are meaningfully cheaper than their U.S. counterparts (see Figure 2). In addition, over half of international sectors trade at or below their 20-year median forward price-to-earnings ratio, whereas all U.S. sectors trade at or above this metric.

Figure 2. International’s Discount Extends Across All Sectors

Source: FactSet, MSCI, S&P. Data is as of April 30, 2025. 

Within international equities, the valuation spread between value and growth stocks remains wide. The MSCI ACWI ex USA Growth Index trades at 19.7 times forward earnings, almost double the MSCI ACWI ex USA Value Index at 10.5 times. We see these disparities as an opportunity to uncover attractive entry points across a range of industries.

Enhanced Diversification

The U.S. equity market is much more concentrated than the international equity market (see Figure 3). A handful of large technology and consumer-related companies dominate a sizable portion of the U.S. market. The combined size of the top five largest holdings in the S&P 500—Apple, Microsoft, NVIDIA, Amazon, and Alphabet—is greater than the market capitalization of any economy outside of the United States (see Figure 4). As of April 30, these five holdings accounted for 25.7% of the S&P 500’s total market capitalization.5 In contrast, the top five stocks in the MSCI ACWI ex USA comprised only 7.0% of that Index’s total market capitalization. International markets are typically more diversified with less dominance from any single sector or individual security.

Figure 3. The U.S. Equity Market Is Highly Concentrated5

Source: FactSet, MSCI, S&P.

Figure 4. The Five Largest U.S. Stocks Are Bigger Than the Market Capitalization of Every Country Outside the U.S.6

Source: CEIC, FactSet. Data is as of April 30, 2025.

Furthermore, international equities offer investors exposure to secular shifts in attractive markets. For example, technological innovation is no longer confined to Silicon Valley, as breakthroughs emerge from diverse hubs around the globe. In emerging markets, demographic trends—such as rapidly growing populations, a rising middle class, and increasing urbanization—are fueling consumption, innovation, and long-term economic growth.

Differentiated Opportunities for Active Managers

Diversifying portfolios alone does not ensure higher returns— being selective matters. There are many large international state-owned companies in the broader international indices that do not prioritize shareholder interests. Investing in those companies is not a recipe for long-term wealth creation. 

Our in-depth research enables us to invest in differentiated international companies that we believe are well-positioned to generate strong long-term returns. While our thesis for each holding is unique, the following examples highlight businesses that are run by excellent management teams and trade at attractive valuations in our view.7 These companies have the potential to outperform their U.S. competitors, not have much U.S. competition, and/or operate in attractive end markets unavailable to U.S. peers.

  • Coupang, often called the “Amazon of South Korea,” has experienced remarkable growth over the past five years, increasing its share of the Korean e-commerce market from 10% to 30%. Founder Bom Kim is credited with spearheading the innovation and operational excellence that have reshaped Korean e-commerce. The company offers a vast product assortment, low prices, and quick delivery—orders placed before midnight are delivered by 6 a.m. the next day. We believe Coupang is well positioned to maintain high growth and expand margins through high-margin advertising revenues and automation-led operational efficiency. Coupang trades at a reasonable valuation when excluding new vertical investments (e.g., restaurant delivery) or relative to gross merchandise value.
  • Taiwan Semiconductor Manufacturing Co. (TSMC) dominates its global industry as the only semiconductor foundry capable of producing leading-edge computer chips used in artificial intelligence applications. Companies like NVIDIA and Apple rely on chips made by TSMC for their most advanced products, enabling the company to profit enormously from its unique competitive advantage. Despite the company’s stable client base, high market share, and product differentiation, TSMC trades at only 14.5 times forward earnings, a discount to its U.S. industry peers.
  • Credicorp exemplifies a good company operating in an attractive market. It is the largest bank in Peru with ~30% market share. The local market is very attractive because the top five banks have over 80% market share. In our view, Credicorp is well-run and highly profitable. Its strong deposit franchise and leading scale drive lower funding and operating costs compared to peers. Led by the Romero family, who own ~15% of the company, Credicorp has prudently navigated credit cycles and generated lower loan losses (as a % of assets) versus peers. All these factors have contributed to Credicorp earning an average return on equity over the last 20 years of 18% versus 10% for U.S. banks.

Potential Boost to Competitiveness

While we construct portfolios on a bottom-up basis, we observe that international governments are embarking upon reforms to improve their competitiveness.

In Japan, corporate governance reforms to increase returns on equity appear to be gaining more traction. Over the past year, more companies have begun to unwind cross-shareholdings and conducted share buybacks to help boost their valuations.

Europe is becoming more business-friendly through deregulation and stimulus measures aimed at boosting economic growth and attracting investment. Additionally, the European Union is harmonizing regulations across member states, creating a more seamless environment for companies to expand and trade across borders. Some nations have introduced tax breaks and incentives to attract foreign investment. These efforts are making Europe a more attractive destination for businesses looking to expand their reach.

Conversely, the expectation that the United States will post stronger economic growth than other regions is more uncertain. Potential tariffs and frequent policy changes have caused market uncertainty and fears of higher inflation and a global recession. The outlook has shifted to a “jump ball” situation, with no clear winner in sight for global economic performance. 

In Closing

Our stable and experienced investment team has navigated several market and economic cycles, which can be long. From 2001–2010, international equities outperformed U.S. equities by 56 percentage points, beating U.S. equities in seven of those 10 years.8 What's striking is that the starting valuation and U.S.-dollar strength back then is similar to today. In 2001, valuation disparities were wide, and the U.S. dollar had strengthened over the prior six years. While history won't repeat itself exactly, we believe the relative outlook for international equities is positive.

International investing is not without its risks. Political instability, currency fluctuations, regulatory changes, and geopolitical tensions all introduce uncertainty. However, skilled investors can mitigate these risks and generate excess returns through careful selection of individual stocks. 

We welcome the opportunity to discuss our active, value-oriented approach to international investing and believe now is an opportune time to seize opportunities that lie beyond U.S. borders.

Contributors

Ray Mertens
Investment Committee Member, Global Industry Analyst, D&C Board Member
Bert Bangayan
Investment Committee Member, Global Industry Analyst

Disclosures

The above information is not a complete analysis of every material fact concerning any market, industry, or investment. Data has been obtained from sources considered reliable, but Dodge & Cox makes no representations as to the completeness or accuracy of such information. Opinions expressed are subject to change without notice. The above returns represent past performance and do not guarantee future results. Dodge & Cox does not seek to replicate the returns of any index. The actual returns of a Dodge & Cox managed portfolio may differ materially from the returns shown above. The information provided is historical and does not predict future results or profitability. This is not a recommendation to buy, sell, or hold any security and is not indicative of Dodge & Cox’s current or future trading activity. Diversification does not ensure a profit or guarantee against losses. All Dodge & Cox trademarks are owned by Dodge & Cox and its affiliates. All other company and product names mentioned are the trademarks or registered trademarks of their respective companies. This information should not be considered a solicitation or an offer to purchase or sell any securities in any jurisdiction or a solicitation or an offer to provide any services in any jurisdiction.

The MSCI information may only be used for your internal use, may not be reproduced or redisseminated in any form and may not be used as a basis for or a component of any financial instruments or products or indices. None of the MSCI information is intended to constitute investment advice or a recommendation to make (or refrain from making) any kind of investment decision and may not be relied on as such. Historical data and analysis should not be taken as an indication or guarantee of any future performance analysis, forecast or prediction. The MSCI Information is provided on an “as is” basis and the user of this information assumes the entire risk of any use made of this information. MSCI, each of its affiliates and each other person involved in or related to compiling, computing or creating any MSCI information (collectively, the “MSCI Parties”) expressly disclaims all warranties (including, without limitation, any warranties of originality, accuracy, completeness, timeliness, non-infringement, merchantability and fitness for a particular purpose) with respect to this information. Without limiting any of the foregoing, in no event shall any MSCI Party have any liability for any direct, indirect, special, incidental, punitive, consequential (including, without limitation, lost profits) or any other damages. MSCI®, EAFE®, and ACWI® are trademarks of MSCI, Inc. (www.msci.com)

The S&P 500 Index (“Index”) and associated data are a product of S&P Dow Jones Indices LLC, its affiliates and/or their licensors and has been licensed for use by Dodge & Cox. © 2024 S&P Dow Jones Indices LLC, its affiliates and/or their licensors. All rights reserved. Redistribution or reproduction in whole or in part are prohibited without written permission of S&P Dow Jones Indices LLC. For more information on any of S&P Dow Jones Indices LLC’s indices please visit www.spdji.com. S&P® is a registered trademark of Standard & Poor’s Financial Services LLC (“SPFS”) and Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”). Neither S&P Dow Jones Indices LLC, SPFS, Dow Jones, their affiliates nor their licensors (“S&P DJI”) make any representation or warranty, express or implied, as to the ability of any index to accurately represent the asset class or market sector that it purports to represent and S&P DJI shall have no liability for any errors, omissions, or interruptions of any index or the data included therein. 

See Disclosures for a full list of financial terms and Index definitions.

Endnotes

1. From December 31, 2009 to December 31, 2024, the S&P 500 Index had a total return on 601.35% compared to 98.53% for the MSCI ACWI ex USA Index.
2. From December 31, 2024 to April 30, 2025, the MSCI ACWI ex USA Index had a total return on 9.03% compared to -4.92% for the S&P 500 Index.
3. Relative historical valuations shown are using forward price-to-earnings valuations from June 30, 2003 to December 31, 2024 and April 30, 2025.
4. Unless otherwise specified, all weightings and characteristics are as of April 30, 2025.
5. “Top 5” refers to the top 5 company weights for each respective index compiled on a monthly basis over the period shown.
6. “Top 5 U.S. Stocks” includes the top 5 companies with the largest weight in the S&P 500 as of the most recent quarter end period and represents a summation of their individual market caps. Forward price-to-earnings ratio value for the “Top 5 U.S. Stocks” is a market capitalization weighted average of the individual companies and is sourced from FactSet. Market capitalization values for the subsequently listed countries are sourced from the latest available market cap data on CEIC. Forward P/E values for the countries listed are sourced from FactSet.
7. The use of specific examples does not imply that they are more or less attractive investments than other securities in the investment universe.
8. From December 31, 2000 to December 31, 2010, the MSCI ACWI ex USA Index had a total return on 71.53% compared to 15.07% for the S&P 500 Index.