Ideas
International stocks reversing and attracting flows.
After strong US outperformance in 2023-24, 2025 produced a stark and sudden reversal with international markets greatly outperforming the US, and that continued into 2026. This has driven over $90 billion into foreign large blend products and much stronger flows into Schwab international index products.
International stocks reversing and attracting flows.
Many investors have unintentionally overpivoted to US equities by not rebalancing after the US run, leaving them roughly 2-5% underweight international equities versus strategic long-term allocations. They would benefit from systematically selling some US equity positions and reallocating to international equities to restore strategic weights.
Weak dollar supports international equities.
International equities have been attractively valued and fundamentally strong since the post-pandemic period, with lower valuations than the US, healthy earnings growth, and healthy returns on capital. The 2025 dollar weakness helped kick off international outperformance, and valuations and fundamentals remain attractive enough that further dollar weakness could keep supporting US-dollar returns on international equities.
Dollar weakness likely on rate differentials.
Josh Jones does not formally forecast FX, but argues the dollar tends to trade off real rate differentials. With the US Treasury desiring lower interest rates, he says it is reasonable to expect a period of dollar weakness over time, which would also continue to support returns for US investors in international equities.
Developed large-cap international equities favored.
Within developed international markets, investor interest is much stronger in large-cap than small-cap. Schwab International Equity ETF SCHF is approaching $70 billion in assets and has seen over $12 billion of flows since early 2024, while developed small-cap flows have been weaker. Strong fundamentals are largely playing out in large-cap companies with more ability to deploy capital, invest, and diversify.
Sustainable international dividends attracting flows.
With uncertainty from inflation, geopolitics, and commodity prices, trades can break down quickly, so investors are favoring companies with strong fundamentals and sustainable dividends. Schwab's International Dividend ETF is seeing strong flows and approaching $2.5 billion in assets.
Materials and industrials supported by commodity cycle.
Josh Jones is most excited about international materials and industrials. Weak-dollar international bull markets in the 1970s and 2000s were associated with real asset and commodity cycles, and today foreign central bank reserve diversification into gold and electrification trends supporting copper are supportive drivers. Metals and mining companies are showing much better capital allocation and very large free cash flow yields, a trend that could persist for years.
Watch regulatory divergence shaping AI trade.
AI's future impact will be significantly shaped by regulatory environments across the US, EU, and Asian economies. This regulatory divergence has not fully played out and will affect the tech and generative AI trade across jurisdictions, including use cases, model producers, semiconductor producers, and the full manufacturing chain.
Prefer asset-heavy sectors over software.
AI has benefited some Japan and Korea holdings from capex spending, but with caution flags on debt-funded AI spend, Josh Jones favors asset-heavy businesses such as financials, industrials, and materials. AI appears to be more negatively impacting software and business-service companies, while asset-heavy businesses and raw material/copper demand tied to electrification are more resilient.
Prefer asset-heavy sectors over software.
AI has benefited some Japan and Korea holdings from capex spending, but with caution flags on debt-funded AI spend, Josh Jones favors asset-heavy businesses such as financials, industrials, and materials. AI appears to be more negatively impacting software and business-service companies, while asset-heavy businesses and raw material/copper demand tied to electrification are more resilient.
This CNBC video, published August 24, 2026,
features David Botset, Josh Jones
discussing Foreign large blend equity ETFs, ACWX, Unhedged international equities, USD, SCHF, International developed large-cap equities, SCHY, COPPER, GLD, XLB, Global technology/AI equities, IDEV, International software & business services.
10 trade ideas extracted by AI with direction and confidence scoring.
Speakers:
David Botset,
Josh Jones
· Tickers:
Foreign large blend equity ETFs,
ACWX,
Unhedged international equities,
USD,
SCHF,
International developed large-cap equities,
SCHY,
COPPER,
GLD,
XLB,
Global technology/AI equities,
IDEV,
International software & business services
