You can't blame investors for thinking there is no place like home. Over the last few years, the U.S. stock market has blown the rest of the world away, posting enormous gains. What people need to remember is that diversification doesn't make sense in any given year. It only makes sense over time.
Many people see that truism being obscured by the big numbers.
Ten years ago, many investors thought the one and only place worth investing was Japan. Around the time they gave up on domestic markets, Japan's economy soured, and the market there hasn't been the same since. What international investments add to a mutual fund portfolio is stability, a more smooth ride. To see that, however, you have to look at investing with a long lens. Consider the last decade, for example.