View from the Observation Deck

Today's blog post features the cumulative total returns of five major equity indices (three domestic and two foreign) since the start of 2000. We chose to highlight 5-year rolling total returns to smooth out intra-year volatility. This post is updated on an annual basis. Click here for last year’s version.

Since 2007, U.S. large-, mid-, and small-capitalization (cap) stocks have taken the top spot in our table. U.S. large-caps, as represented by the S&P 500 Index, have provided the best performance in eight of the last 5-year rolling periods. From our perspective, this is likely the result of continued globalization (despite tariffs) and a stronger U.S. dollar (+9.32% from 2021 – 2025).

Regarding the U.S. dollar: a strong dollar can cause a decline in returns for U.S. investors holding positions in unhedged foreign securities, while a weak dollar can have the opposite effect. From 2000-2009, the U.S. Dollar Index declined by 23.57% − a nice tailwind for foreign holdings. From 2010-2019, the same index appreciated by 23.80% − a notable headwind for foreign holdings. The U.S. Dollar Index increased by 2.01% in the current decade (2020-2025), standing at 98.32 on 12/31/25, well above its 20-year average of 90.43.

While it is no secret that U.S. companies generate a significant portion of their revenue from overseas, many investors may not be aware of just how dependent they have become on international sales. Notably, 42.1% of S&P 500 Index revenues were generated outside of the U.S. as of 12/31/25.
For additional context, the average annual total returns for each of the five equity indices in today’s table were as follows (12/31/99 – 12/31/25): S&P MidCap 400 (9.57%); S&P SmallCap 600 (9.36%); S&P 500 (8.06%); MSCI Daily TR Net Emerging Markets in USD (6.62%); and MSCI World ex-U.S. (4.74%), according to data from Bloomberg.

Takeaway: The returns depicted in today’s table offer a powerful reminder that the buy and hold strategy can still serve investors well. Despite rising geopolitical tensions, wars, government lockdowns, and a bear market (in the S&P 500 Index in 2022), each of the indices in today’s table reflect positive total returns over the most recent 5-year rolling period. While the S&P 500 Index remains a clear outlier, there is no way to predict what indices could outperform next. Emerging market and international equities, as represented by the MSCI Emerging Markets and MSCI World (ex-US) Indices, increased by 33.57% and 31.85%, respectively, in 2025 alone. The dollar declined during the year, shedding 9.37% of its value. Will continued pressures on the dollar coupled with restrictive tariffs and resurgent global economies lead to a change in our best performer over the coming years? While we can’t know, we trust today’s data discourages an overly myopic view among equity investors with long time horizons.

This chart is for illustrative purposes only and not indicative of any actual investment. The illustration excludes the effects of taxes and brokerage commissions and other expenses incurred when investing. Investors cannot invest directly in an index. The S&P 500 Index is a capitalization-weighted index comprised of 500 stocks used to measure large-cap U.S. stock market performance. The S&P MidCap 400 Index is a capitalization-weighted index that tracks the mid-range sector of the U.S. stock market. The S&P Small Cap 600 Index is a capitalization-weighted index that tracks U.S. stocks with a small market capitalization. The MSCI World (ex-U.S.) Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets excluding the U.S. The MSCI Emerging Markets Index is a free float-adjusted market capitalization index that is designed to measure equity market performance of emerging markets. The U.S. Dollar Index (DXY) indicates the general international value of the dollar relative to a basket of major world currencies.

To Download a PDF of this post, please click here.