The pace of the gains might raise some eyebrows. The MSCI World index of developed-market stocks rose 2.5% in the first week of 2018; its emerging-market peer climbed 3.7%. In Europe, the crisis laggards performed well, with Italian stocks up more than 4%.
The global economic recovery started the year off on a tear. Stocks went coconuts all over the world in week one. Despite big gains for global stocks last year, many investors still aren’t ready for the new level of what’s happening. They’re underinvested the world relative to the US. According to Vanguard, the typical US investor’s account is drastically so.
But I don’t think the same is true for investor accounts administered by investment advisors. From what I see and hear, advisors’ clients are generally more well diversified compared to the average investor population and, as a result, appropriately exposed to the big boom happening overseas.
With continuing dollar weakness and an active Federal Reserve, the new trend of overseas outperformance that began last year could well continue.