Throughout 2025, President Donald Trump often stated that the U.S. stock markets are the “best in history.”
Notably absent from his statements was any acknowledgment or awareness that international markets significantly outperformed U.S. stocks in 2025 (MSCI EAFE +31.6% vs. S&P 500 +16.4%), which undercuts his claim that U.S. performance was uniquely exceptional. This is is noteworthy because the U.S. (particularly tech stocks) had dominated for the previous 15 years.
For an interactive chart, click here.
2025 Returns:
- S&P 500 (U.S.): +16.4%
- MSCI EAFE (Developed markets ex-US): +31.6%
- MSCI Emerging Markets: +30%
- MSCI ACWI ex-USA (All countries ex-US): +29.2%
Major Takeaways:
- International markets significantly outperformed the U.S. in 2025, nearly doubling the S&P 500’s returns
- Asian markets were standouts: South Korea’s Kospi surged 76%, Japan’s Nikkei rose 26%, and Taiwan’s TSMC gained 46.5%
- The AI boom extended beyond U.S. tech giants to global chipmakers and tech companies
- A 9.4% decline in the U.S. dollar (its worst year since 2017) boosted foreign investment returns for American investors
- European markets benefited from Germany’s fiscal stimulus plans, with MSCI Europe up 35.4%
The visualization shows this rare reversal where international diversification paid off handsomely after years of U.S. dominance.
I’ll explain each of these major stock market indexes:
S&P 500
- What it tracks: The 500 largest publicly traded companies in the United States
- Coverage: Represents about 75% of the U.S. stock market by value
- Examples: Apple, Microsoft, Amazon, Google, NVIDIA
- Purpose: The primary benchmark for U.S. large-cap stock performance
MSCI EAFE
- Stands for: Europe, Australasia, and Far East
- What it tracks: Large and mid-cap stocks in 21 developed countries, excluding the U.S. and Canada
- Geographic breakdown:
- Europe: UK, Germany, France, Switzerland, etc.
- Asia: Japan, Hong Kong, Singapore, Australia
- Coverage: About 85% of the free float-adjusted market cap in each country
- Purpose: The standard benchmark for international developed market stocks (from a U.S. investor’s perspective)
MSCI Emerging Markets
- What it tracks: Large and mid-cap stocks across 24 emerging market countries
- Major countries included:
- China, India, Taiwan, South Korea
- Brazil, Mexico
- Saudi Arabia, South Africa
- Coverage: About 85% of market cap in each emerging market
- Key difference from EAFE: These are faster-growing economies with higher risk/reward profiles
- Purpose: Benchmark for investing in developing economies with higher growth potential
MSCI ACWI ex-USA
- Stands for: All Country World Index excluding USA
- What it tracks: Both developed AND emerging markets outside the U.S. (combines EAFE + Emerging Markets)
- Coverage: 49 countries total
- Purpose: The broadest measure of international stocks – everything except America
Key Distinction: Developed vs. Emerging
- Developed markets (EAFE): Mature economies with stable governments, established financial markets, lower growth but lower risk (Japan, UK, Germany, etc.)
- Emerging markets: Faster-growing economies with more volatility, political risk, but higher potential returns (China, India, Brazil, etc.)