To be sure, lingering issues remain in international markets. Chinese equities have skyrocketed on the back of speculative buying locally and easy money policies. In Europe, Greece is a lingering problem and time is running out.
Still, lower valuations and monetary accommodation suggest investors should consider raising their allocation to non-U.S. equities. And as they do, U.S. investors should preferably gain that exposure via instruments that seek to hedge the foreign currency impact, as dollar strength means equity gains in local currency terms will be muted when translated back into U.S. dollars.
Sources: Bloomberg, BlackRock
Russ Koesterich, CFA, is the Chief Investment Strategist for BlackRock. He is a regular contributor to The Blog.