To order reprints of this article, click here . It's understandable to question how much help you're getting from your international funds these days. The past year is not an isolated event, either. The evidence is clear that most international funds have tracked the U.S. market more closely over the past three years than they did in the past. 0.21 0.28 Large Blend 0.95 0.98 Several factors account for the higher R-squared over the past three years, but one stands out.
Many international funds have substantially more exposure to such stocks than they once did.
You should look at the big picture, though, before you give up on the benefits of international funds. Various regional offerings have mirrored the index even less often. What's more, the situation isn't immutable. Sectors won't necessarily continue to be more important than countries in the years ahead, and tech exposure won't always be the key to performance. For those reasons, they should have more than niche appeal.