"Buy America" or "Bye, America": Why International Stocks Could Be a Good Buy

If you're a U.S. stock investor, you might be feeling underwhelmed by your portfolio's performance so far in 2026. The S&P 500 index is mostly going sideways (up 0.5% year to date), and the tech-heavy Nasdaq-100 index is down about 1.2% year to date after being hit hard by artificial intelligence (AI) fears and a software stock sell-off.

While American stocks are in the doldrums, the rest of the world is picking up the pace. According to Reuters, research from LSEG/Lipper shows that U.S.-based investors have pulled about $75 billion out of U.S. stocks in the past six months. And $52 billion of those outflows happened since Jan. 1, 2026. This is the fastest pace of U.S. investors fleeing U.S. stocks during the first eight weeks of a new year since at least 2010.

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Could this be the start of a long-term "bye, America" trade? Let's look at a few reasons to buy international stocks as part of a diversified portfolio.

International stocks are booming

During the past year, the American stock market has been strongly outperformed by international ETFs in Europe, the Pacific, and emerging markets. Some individual countries' stock markets have done even better -- South Korea's stock market is up about 177% in the past year. According to LSEG/Lipper data cited by Reuters, U.S. investors have put $26 billion into emerging market stocks so far this year, with South Korea and Brazil being the top destinations.

SPY data by YCharts

Possible reasons for strong performance of international stocks include a declining U.S. dollar, investor concerns about the high valuations and risks of AI stocks, and investor-friendly policy changes in other countries. But the biggest reason might be optimism for continued economic growth and rising earnings in other countries beyond America. Even if the U.S. stock market keeps growing, international stocks could keep growing faster.

How to buy international stocks right now

If you want to get in on the "bye, America" trade, the Vanguard Total International Stock ETF (NASDAQ: VXUS) could be a good choice. This international stock ETF lets you buy 8,691 stocks all at once, with a low expense ratio of 0.05%.

With this fund, you don't have to try to pick which country's stock market is the best place to invest. Instead, you can own the rest of the world's most important stock markets, in the regions of Europe (37.9% of the fund), Emerging Markets (26.6%), Pacific (26.4%) and more.

VXUS has outperformed the S&P 500 and the Nasdaq-100 indexes for the past year and has delivered average annual returns of 10.6% for the past 10 years. The fund's price to earnings ratio is only 19.1, which means international stocks might still be undervalued compared to American stocks -- the S&P 500 has a P/E ratio of 27.6.

Past performance is no guarantee of future results, and the American stock market might come roaring back with a resurgence of the "buy America" trade. But if you want to diversify your portfolio away from the U.S. economy, this international ETF gives you an easy, low-cost way to make it happen.

Ben Gran has positions in Vanguard Total International Stock ETF. The Motley Fool has positions in and recommends Vanguard Total International Stock ETF. The Motley Fool has a disclosure policy.