Over time, U.S. and international equity markets take turns leading and lagging each other. During the past six years, U.S. stocks roughly doubled the return of foreign stocks. But during the previous six years, foreign stocks rose nearly five times more than U.S. equities. Is it time for international shares to re-take the lead? Understanding what drives these cycles can help active portfolio managers identify opportunities that passive index funds don't account for. With this in mind, Fidelity's research team analyzed the impact of several factors-including equity valuations, GDP growth and earnings growth-on stock market performance. We found the markets that performed best were the ones where companies' earnings grew the fastest.
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