**Key Facts:**
The iShares Core MSCI Total International Stock ETF (NASDAQ: IXUS) has seen a notable surge, rising 29% in the past year, surpassing the 22% increase of the S&P 500 (SNPINDEX: ^GSPC). This shift raises questions about whether the trend is a temporary anomaly or indicative of a long-term change in investment patterns towards international stocks.
International stocks currently trade at a more attractive valuation, with the MSCI Total International ETF priced at a price-to-earnings (P/E) ratio of just under 18, compared to about 26.5 for the S&P 500. Additionally, approximately 38% of the S&P 500 is comprised of just 10 tech firms, while the top 10 in the MSCI index account for only 14%.
China’s regulatory landscape is evolving, with the Securities Regulatory Commission introducing a two-year plan to enhance transparency for foreign investors, potentially making Chinese stocks more appealing. This includes a focus on clearer governance and stricter penalties for fraud, which could attract capital that might otherwise flow to U.S. markets.
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