Investing Beyond the US: The Equity Market Opportunity

We believe developed markets beyond the US, including Europe and Japan, offer potential opportunities for fundamental and quantitative investors in 2026 and beyond. Here we address the reasons why, which include diversification appeal, exposure to structural drivers in Europe, the under-researched nature of Japan, and the potential for consistent income.

1. Why look beyond the US for diversification?

Markets in Europe, Australasia, and the Far East (EAFE) can provide greater diversification relative to the S&P 500, with less concentration among the top ten holdings and more exposure to different parts of the economy, including financials and industrials. This underscores the broader and more balanced opportunity set available outside the US.

International markets provide more exposure to value-oriented sectors Bar chart displaying EAFE sector weight differences relative to the S&P 500, showing Financials at +12% and Industrials at +10% overweight and Information Technology at -24% underweight.

Bar chart displaying EAFE sector weight differences relative to the S&P 500, showing Financials at +12% and Industrials at +10% overweight and Information Technology at -24% underweight.

Source: MSCI and FactSet. As of March 31, 2026. Diversification does not protect an investor from market risk and does not ensure a profit. The portfolio risk management process includes an effort to monitor and manage risk, but does not imply low risk.

2. What growth opportunities exist outside the US?

Europe is gradually deploying its fiscal firepower across infrastructure and defense, which may boost growth. In Japan, earnings are expected to accelerate, supported by improving shareholder returns aided by corporate governance reforms.

Exposure to idiosyncratic growth drivers may benefit international markets Grouped bar charts comparing US GDP growth declining from 2.9% in 2023 to 2.1% in 2028E versus Euro Area increasing from 0.4% to 1.4%, and EPS growth estimates for S&P 500 at 24%, TOPIX at 11%, and STOXX 600 at 10% in 2026E.

Grouped bar charts comparing US GDP growth declining from 2.9% in 2023 to 2.1% in 2028E versus Euro Area increasing from 0.4% to 1.4%, and EPS growth estimates for S&P 500 at 24%, TOPIX at 11%, and STOXX 600 at 10% in 2026E.

Source: (1) Goldman Sachs Global Investment Research. As of June 8, 2026. (2) Bloomberg. As of March 31, 2026. The economic and market forecasts presented herein are for informational purposes as of the date of this presentation. There can be no assurance that the forecasts will be achieved. Please see additional disclosures at the end of this presentation.

3. Where can market inefficiencies create alpha?

International markets are under-researched and fragmented. Japan is one of the largest under-researched equity markets globally, and most information is in the local language. In Europe, information about stocks diffuses more slowly than in the US, creating opportunities for active stock selection.

Market inefficiencies are apparent in analyst coverage and news flow Stacked and grouped bar charts comparing analyst coverage and news flow, showing Japan TOPIX with 670 uncovered stocks versus 1 in the S&P 500, and US equities averaging 36 news articles per stock versus 14 in Europe, as of 2026.

Stacked and grouped bar charts comparing analyst coverage and news flow, showing Japan TOPIX with 670 uncovered stocks versus 1 in the S&P 500, and US equities averaging 36 news articles per stock versus 14 in Europe, as of 2026.

Source: (1) Goldman Sachs Asset Management, Bloomberg. Proportion of availability of any analyst coverage per stock in the respective benchmark universe. For illustrative purposes only. Index constituents' data are as of March 31, 2026. Analyst coverage data are as of April 16, 2026. The Japan TOPIX Index Value and the Japan TOPIX Marks is subject to the proprietary rights owned by JPX Market Innovation & Research, Inc., or affiliates of JPX Market Innovation & Research, Inc. (hereinafter collectively referred to as "JPX") and JPX owns all rights and know-how relating to Japan TOPIX such as calculation, publication and use of the Japan TOPIX Index Value and relating to the Japan TOPIX Marks. JPX shall not be liable for the miscalculation, incorrect publication, delayed or interrupted publication of the Japan TOPIX Index Value. (2) Goldman Sachs Asset Management, Dow Jones. As of December 31, 2024.

4. Are international equities more attractively valued?

A valuation gap persists as non-US equities continue to trade at a discount to US stocks. Specifically, the MSCI EAFE Index is priced at a historically wide discount to the S&P 500, which we believe creates a potential entry point for investors seeking undervalued opportunities.

EAFE’s discount to the S&P 500 is growing Line chart comparing forward P/E ratios for the S&P 500, MSCI EAFE, and MSCI EAFE Long Term Average from January 2006 to March 2026, showing S&P 500 reaching 19.7x versus MSCI EAFE at 14.9x.

Line chart comparing forward P/E ratios for the S&P 500, MSCI EAFE, and MSCI EAFE Long Term Average from January 2006 to March 2026, showing S&P 500 reaching 19.7x versus MSCI EAFE at 14.9x.

Source: MSCI, FactSet. As of March 31, 2026.

5. How can income strengthen total returns?

International equities are structurally higher yielding, making dividends a meaningful driver of total returns. While dividends enhance total return potential during market upswings, they also serve as a defensive anchor, seeking to provide risk protection and capital preservation amid market volatility.

Income provides a buffer in a world of uncertainty Bar chart comparing dividends as a percentage of total returns for MSCI EAFE and S&P 500 over trailing 5, 10, and 20 years, showing MSCI EAFE contributing 39%, 48%, and 68% versus 14%, 21%, and 37%.

Bar chart comparing dividends as a percentage of total returns for MSCI EAFE and S&P 500 over trailing 5, 10, and 20 years, showing MSCI EAFE contributing 39%, 48%, and 68% versus 14%, 21%, and 37%.

Source: FactSet. As of December 31, 2025.

We believe capturing alpha in global markets requires a global network and deep data expertise; our team is ready to navigate these global opportunities alongside you.

Author(s)

Kelly Panasy

Senior Client Portfolio Manager, Fundamental Equity

Sarah Rich

Lead Client Portfolio Manager for Americas Third-Party Wealth, Quantitative Investment Strategies (QIS)

Start the Conversation

Contact Goldman Sachs Asset Management for a detailed discussion of your needs.

Glossary-See Glossary for definition of terms used in reference to Products

Risk considerations and disclosures

Equity investments are subject to market risk, which means that the value of the securities in which it invests may go up or down in response to the prospects of individual companies, particular sectors and/or general economic conditions. Different investment styles (e.g., “growth” and “value”) tend to shift in and out of favor, and, at times, the strategy may underperform other strategies that invest in similar asset classes. The market capitalization of a company may also involve greater risks (e.g. "small" or "mid" cap companies) than those associated with larger, more established companies and may be subject to more abrupt or erratic price movements, in addition to lower liquidity.

International securities may be more volatile and less liquid and are subject to the risks of adverse economic or political developments. International securities are subject to greater risk of loss as a result of, but not limited to, the following: inadequate regulations, volatile securities markets, adverse exchange rates, and social, political, military, regulatory, economic or environmental developments, or natural disasters.

The Global Industry Classification Standard (“GICS”) was developed by and is the exclusive property and a service mark of MSCI Inc. (“MSCI”) and S&P Global Market Intelligence (“S&P”) and is licensed for use by Goldman Sachs. Neither MSCI, S&P, nor any other party involved in making or compiling the GICS or any GICS classifications makes any express or implied warranties or representations with respect to such standard or classification (or the results to be obtained by the use thereof), and all such parties hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability and fitness for a particular purpose with respect to any of such standard or classification. Without limiting any of the foregoing, in no event shall MSCI, S&P, any of their affiliates or any third party involved in making or compiling the GICS or any GICS classifications have any liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if notified of the possibility of such damages.

Neither MSCI nor any other party involved in or related to compiling, computing, or creating the MSCI data makes any express or implied warranties or representations with respect to such data (or the results to be obtained by the use thereof), and all such parties hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability, or fitness for a particular purpose with respect to any of such data. Without limiting any of the foregoing, in no event shall MSCI, any of its affiliates or any third party involved in or related to compiling, computing or creating the data have any liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if notified of the possibility of such damages. No further distribution or dissemination of the MSCI data is permitted without MSCI’s express written consent.

Although certain information has been obtained from sources believed to be reliable, we do not guarantee its accuracy, completeness or fairness. We have relied upon and assumed without independent verification, the accuracy and completeness of all information available from public sources.

Views and opinions expressed are for informational purposes only and do not constitute a recommendation by Goldman Sachs Asset Management to buy, sell, or hold any security. Views and opinions are current as of the date of this publication and may be subject to change, they should not be construed as investment advice.

Individual portfolio management teams for Goldman Sachs Asset Management may have views and opinions and/or make investment decisions that, in certain instances, may not always be consistent with the views and opinions expressed herein.

There is no guarantee that objectives will be met.

Diversification does not protect an investor from market risk and does not ensure a profit.

This material is provided at your request solely for your use.

THIS MATERIAL DOES NOT CONSTITUTE AN OFFER OR SOLICITATION IN ANY JURISDICTION WHERE OR TO ANY PERSON TO WHOM IT WOULD BE UNAUTHORIZED OR UNLAWFUL TO DO SO.

Prospective investors should inform themselves as to any applicable legal requirements and taxation and exchange control regulations in the countries of their citizenship, residence or domicile which might be relevant.

This material is provided for educational and informational purposes only and should not be construed as investment advice or an offer or solicitation to buy or sell securities. This material is not intended to be used as a general guide to investing, or as a source of any specific investment recommendations, and makes no implied or express recommendations concerning the manner in which any client’s account should or would be handled, as appropriate investment strategies depend upon the client’s investment objectives.

United States: In the United States, this material is offered by and has been approved by Goldman Sachs Asset Management, L.P. and Goldman Sachs & Co. LLC, which are registered investment advisers with the Securities and Exchange Commission.

United Kingdom: In the United Kingdom, this material is a financial promotion and has been approved by Goldman Sachs Asset Management International, which is authorized and regulated in the United Kingdom by the Financial Conduct Authority.

European Economic Area (EEA): This marketing communication is disseminated by Goldman Sachs Asset Management B.V., including through its branches (“GSAM BV”). GSAM BV is authorised and regulated by the Dutch Authority for the Financial Markets (Autoriteit Financiële Markten, Vijzelgracht 50, 1017 HS Amsterdam, The Netherlands) as an alternative investment fund manager (“AIFM”) as well as a manager of undertakings for collective investment in transferable securities (“UCITS”). Under its licence as an AIFM, the Manager is authorized to provide the investment services of (i) reception and transmission of orders in financial instruments; (ii) portfolio management; and (iii) investment advice. Under its licence as a manager of UCITS, the Manager is authorized to provide the investment services of (i) portfolio management; and (ii) investment advice.

Information about investor rights and collective redress mechanisms are available on am.gs.com/policies-and-governance. Capital is at risk. Any claims arising out of or in connection with the terms and conditions of this disclaimer are governed by Dutch law.

Switzerland: For Qualified Investor use only – Not for offering or advertising to general public. This is marketing material for financial instruments. The Prospectus, the Key Information Document (KID) or UK Key Investor Information Document (KIID) (as available), the Fund’s offering memorandum or equivalent document, the constitutional documents, the annual reports and, where produced by the Fund, the semi-annual reports of the Fund may be obtained free of charge from the Swiss Representative. In respect of the shares, units or interests offered or advertised in Switzerland to Qualified Investors, the place of performance is at the registered office of the Swiss Representative. The place of jurisdiction is at the registered office of the representative or at the registered office or place of residence of the investor.

Asia excluding Japan: Please note that neither Goldman Sachs Asset Management (Hong Kong) Limited (“GSAMHK”) or Goldman Sachs Asset Management (Singapore) Pte. Ltd. (Company Number: 201329851H ) (“GSAMS”) nor any other entities involved in the Goldman Sachs Asset Management business that provide this material and information maintain any licenses, authorizations or registrations in Asia (other than Japan), except that it conducts businesses (subject to applicable local regulations) in and from the following jurisdictions: Hong Kong, Singapore, India and China. This material has been issued for use in or from Hong Kong by Goldman Sachs Asset Management (Hong Kong) Limited and in or from Singapore by Goldman Sachs Asset Management (Singapore) Pte. Ltd. (Company Number: 201329851H).

Australia: This material is distributed in Australia and New Zealand by Goldman Sachs Asset Management Australia Pty Ltd ABN 41 006 099 681, AFSL 228948 (’GSAMA’) and is intended for viewing only by wholesale clients in Australia for the purposes of section 761G of the Corporations Act 2001 (Cth) and to clients who either fall within any or all of the categories of investors set out in section 3(2) or sub-section 5(2CC) of the Securities Act 1978, fall within the definition of a wholesale client for the purposes of the Financial Service Providers (Registration and Dispute Resolution) Act 2008 (FSPA) and the Financial Advisers Act 2008 (FAA),and fall within the definition of a wholesale investor under one of clause 37, clause 38, clause 39 or clause 40 of Schedule 1 of the Financial Markets Conduct Act 2013 (FMCA) of New Zealand (collectively, a “NZ Wholesale Investor”). GSAMA is not a registered financial service provider under the FSPA. GSAMA does not have a place of business in New Zealand. In New Zealand, this document, and any access to it, is intended only for a person who has first satisfied GSAMA that the person is a NZ Wholesale Investor. This document is intended for viewing only by the intended recipient. This document may not be reproduced or distributed to any person in whole or in part without the prior written consent of GSAMA.

To the extent that this document contains any statement which may be considered to be financial product advice in Australia under the Corporations Act 2001 (Cth), that advice is intended to be given to the intended recipient of this document only, being a wholesale client for the purposes of the Corporations Act 2001 (Cth).

Any advice provided in this document is provided by either of the following entities. They are exempt from the requirement to hold an Australian financial services licence under the Corporations Act of Australia and therefore do not hold any Australian Financial Services Licences, and are regulated under their respective laws applicable to their jurisdictions, which differ from Australian laws. Any financial services given to any person by these entities by distributing this document in Australia are provided to such persons pursuant to the respective ASIC Class Orders and ASIC Instrument mentioned below.

* Goldman Sachs Asset Management, LP (GSAMLP), Goldman Sachs & Co. LLC (GSCo), pursuant ASIC Class Order 03/1100; regulated by the US Securities and Exchange Commission under US laws.

* Goldman Sachs Asset Management International (GSAMI), Goldman Sachs International (GSI), pursuant to ASIC Class Order 03/1099; regulated by the Financial Conduct Authority; GSI is also authorized by the Prudential Regulation Authority, and both entities are under UK laws.

* Goldman Sachs Asset Management (Singapore) Pte. Ltd. (GSAMS), pursuant to ASIC Class Order 03/1102; regulated by the Monetary Authority of Singapore under Singaporean laws

* Goldman Sachs Asset Management (Hong Kong) Limited (GSAMHK), pursuant to ASIC Class Order 03/1103 and Goldman Sachs (Asia) LLC (GSALLC), pursuant to ASIC Instrument 04/0250; regulated by the Securities and Futures Commission of Hong Kong under Hong Kong laws

No offer to acquire any interest in a fund or a financial product is being made to you in this document. If the interests or financial products do become available in the future, the offer may be arranged by GSAMA in accordance with section 911A(2)(b) of the Corporations Act. GSAMA holds Australian Financial Services Licence No. 228948. Any offer will only be made in circumstances where disclosure is not required under Part 6D.2 of the Corporations Act or a product disclosure statement is not required to be given under Part 7.9 of the Corporations Act (as relevant).

FOR DISTRIBUTION ONLY TO FINANCIAL INSTITUTIONS, FINANCIAL SERVICES LICENSEES AND THEIR ADVISERS. NOT FOR VIEWING BY RETAIL CLIENTS OR MEMBERS OF THE GENERAL PUBLIC.

Canada: This presentation has been communicated in Canada by GSAM LP, which is registered as a portfolio manager under securities legislation in all provinces of Canada and as a commodity trading manager under the commodity futures legislation of Ontario and as a derivatives adviser under the derivatives legislation of Quebec. GSAM LP is not registered to provide investment advisory or portfolio management services in respect of exchange-traded futures or options contracts in Manitoba and is not offering to provide such investment advisory or portfolio management services in Manitoba by delivery of this material.

Japan: This material has been issued or approved in Japan for the use of professional investors defined in Article 2 paragraph (31) of the Financial Instruments and Exchange Law (“FIEL”). Also, Any description regarding investment strategies on collective investment scheme under Article 2 paragraph (2) item 5 or item 6 of FIEL has been approved only for Qualified Institutional Investors defined in Article 10 of Cabinet Office Ordinance of Definitions under Article 2 of FIEL.

FOR INTENDED AUDIENCES ONLY – NOT FOR WIDER DISTRIBUTION
Qatar: This document has not been, and will not be, registered with or reviewed or approved by the Qatar Financial Markets Authority, the Qatar Financial Centre Regulatory Authority or Qatar Central Bank and may not be publicly distributed. It is not for general circulation in the State of Qatar and may not be reproduced or used for any other purpose.

FOR INTENDED AUDIENCES ONLY – NOT FOR WIDER DISTRIBUTION
Kuwait: This material has not been approved for distribution in the State of Kuwait by the Ministry of Commerce and Industry or the Central Bank of Kuwait or any other relevant Kuwaiti government agency. The distribution of this material is, therefore, restricted in accordance with law no. 31 of 1990 and law no. 7 of 2010, as amended. No private or public offering of securities is being made in the State of Kuwait, and no agreement relating to the sale of any securities will be concluded in the State of Kuwait. No marketing, solicitation or inducement activities are being used to offer or market securities in the State of Kuwait.

FOR INTENDED AUDIENCES ONLY – NOT FOR WIDER DISTRIBUTION
United Arab Emirates: This document has not been approved by, or filed with the Central Bank of the United Arab Emirates or the Securities and Commodities Authority. If you do not understand the contents of this document, you should consult with a financial advisor.

FOR INTENDED AUDIENCES ONLY – NOT FOR WIDER DISTRIBUTION
Saudi Arabia: These materials are presented to you by Goldman Sachs Saudi Arabia Company ("GSSA"). GSSA is authorised and regulated by the Capital Market Authority (“CMA”) in the Kingdom of Saudi Arabia. GSSA is subject to relevant CMA rules and guidance, details of which can be found on the CMA’s website at www.cma.org.sa.

The CMA does not make any representation as to the accuracy or completeness of these materials, and expressly disclaims any liability whatsoever for any loss arising from, or incurred in reliance upon, any part of these materials. If you do not understand the contents of these materials, you should consult an authorised financial adviser.

France: FOR PROFESSIONAL USE ONLY (WITHIN THE MEANING OF THE MIFID DIRECTIVE)- NOT FOR PUBLIC DISTRIBUTION. THIS DOCUMENT IS PROVIDED FOR SPECIFIC INFORMATION PURPOSES ONLY IN ORDER TO ENABLE THE RECIPIENT TO ASSESS THE FINANCIAL CHARACTERISTICS OF THE CONCERNED FINANCIAL INSTRUMENT(S) AS PROVIDED FOR IN ARTICLE L. 533-13-1, I, 2° OF THE FRENCH MONETARY AND FINANCIAL CODE AND DOES NOT CONSTITUTE AND MAY NOT BE USED AS MARKETING MATERIAL FOR INVESTORS OR POTENTIAL INVESTORS IN FRANCE.

Compliance code: N12085-OTU-402751/515625-OTU-2557435

Date of first use: June 17, 2026