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More Gains for International-Equity Funds in the Third Quarter

Strong growth in Asia, especially China, drives stellar emerging-markets returns.

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International equities continued to post gains in 2020's third quarter, though they were more muted than the previous quarter's sharp market rebound. Continued widespread uncertainty surrounding the global pandemic did not hold the markets back during the third quarter; as the global death toll from the coronavirus exceeded 1 million, the MSCI All Country World Index ex USA grew 6.3%.

Many market trends persisted during the third quarter. The long-standing growth-value disparity pressed on, as the foreign large-growth and foreign small/mid-growth Morningstar Categories surpassed their value counterparts by 6.6 and 4.6 percentage points, respectively, in the quarter. In the face of increased COVID-19 daily case counts, political uncertainty, and civil unrest, the U.S. markets bested international markets; the broad Russell 3000 Index returned 9.2% over the period, outpacing the foreign proxy by 3.0 percentage points. Similar to last quarter, emerging markets outperformed developed markets. The MSCI Emerging Markets Index rose 9.6% versus the MSCI EAFE Index's 4.8% gain from June through September. Strong growth in Asian markets propelled emerging-markets returns.

Claire Butz does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

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