International stocks outperform growth stocks in 2026

PARAGRAPH 1 --- Vanguard research projects international stocks, particularly developed-market stocks, to outperform U.S. tech stocks over the next five to ten years. This projection is supported by the strong performance of international ETFs like the Vanguard International High Dividend Yield ETF, which delivered a 20% return, and the Vanguard Total International Stock ETF, which gained nearly 37% in the past year. Meanwhile, the Nasdaq 100, a tech-heavy index, is down more than 6% year-to-date.

PARAGRAPH 2 --- This narrative impacts investors in U.S. tech stocks and international equity funds. It suggests a potential shift in leadership from U.S. tech stocks to international equities, driven by changing economic dynamics and currency fluctuations. This could lead to a reallocation of capital from U.S. growth stocks to international stocks, affecting fund flows and valuations.

PARAGRAPH 3 --- To watch next, investors should look out for the following catalysts: 1) Vanguard's quarterly performance reports to see if international stocks maintain their outperformance; 2) U.S. dollar index movements, as a softer dollar could boost foreign earnings and international stock performance; 3) Earnings reports from major U.S. tech companies to gauge their growth prospects and potential impact on investor sentiment.