Why Goldman Sachs Analyst Peter Oppenheimer Sees Emerging Markets Outpacing the S&P 500 Long-Term

The gap between U.S. equities and global stock performance has reached its widest point in decades. As of early 2026, the S&P 500 has advanced less than 1% since the start of the year, while international stocks (excluding U.S. holdings) have climbed approximately 10%. This growing divergence reflects a fundamental shift in how investors are allocating capital and where they see the best opportunities ahead.

The performance gap is particularly striking when measured against President Trump’s second term, which began in January 2025. Since then, international equities have surged 40% compared to the S&P 500’s 15% gain—a remarkable 25 percentage point outperformance that represents one of the most unprecedented periods in recent market history.

The Valuation Gap Driving Global Stock Outperformance

The primary driver behind international stocks’ superior performance lies in valuation differences. The U.S. stock market trades at a substantial premium to global alternatives. According to JPMorgan Chase analysis, the forward price-to-earnings multiple of the MSCI ACWI ex U.S. Index sits approximately 32% below that of the S&P 500. More concerning for U.S. equity investors, the current U.S. valuation premium is nearly double the historical average, suggesting American stocks have become increasingly expensive by historical standards.

This valuation disparity has made global equities particularly attractive to sophisticated investors seeking better risk-adjusted returns. While U.S. stocks have regularly commanded a premium to international markets over the past two decades, the current spread appears unsustainable and has prompted capital reallocation toward cheaper international alternatives.

Currency Movements and Policy Uncertainty Amplify Global Gains

Beyond valuation considerations, currency dynamics have played a crucial role in international stocks’ outperformance. The U.S. Dollar Index has depreciated approximately 10% during President Trump’s second term, driven by concerns about trade policy implications, rising federal debt levels, and market skepticism regarding Federal Reserve decisions.

A weakening U.S. dollar functions as a powerful tailwind for international equity investors. When foreign holdings are converted back to dollars, the currency devaluation effectively amplifies returns. This currency boost has provided an additional advantage to global stock investors beyond the underlying equity appreciation in those markets.

The policy environment itself has also influenced investor behavior. Concerns that protectionist trade policies could slow U.S. economic growth have prompted a rotation toward international alternatives, particularly in emerging markets where growth rates are expected to remain stronger and where valuations offer greater margin of safety.

Peter Oppenheimer’s Long-Term Outlook: A Decade of Emerging Market Strength

Goldman Sachs, through its chief investment strategist Peter Oppenheimer, has provided detailed forecasts about where returns will likely come from over the next decade. These projections paint a compelling picture for international equity investors.

According to Peter Oppenheimer’s research, the S&P 500 is expected to compound at approximately 6.5% annually over the next ten years. By contrast, other major stock markets are anticipated to deliver substantially stronger returns when measured in U.S. dollars:

European equities are forecast to return 7.5% annually, providing modest outperformance versus U.S. stocks. Japanese markets are projected to deliver 12% annual returns, while Asian markets excluding Japan are expected to appreciate at 12.6% annually. Most dramatically, emerging market equities—the focus of Peter Oppenheimer’s elevated expectations—are projected to return 12.8% annually, roughly double the anticipated S&P 500 performance.

These forecasts from Goldman Sachs underscore a critical insight: after a long period of U.S. stock market dominance, the next decade may belong to emerging markets. The combination of cheaper valuations, stronger growth rates, and favorable demographic trends in emerging economies forms the foundation of this bullish outlook.

Capturing Emerging Market Exposure: ETF Comparison and Strategy

For investors seeking exposure to emerging market opportunities highlighted by Peter Oppenheimer’s analysis, two primary index-based options exist. The Vanguard FTSE Emerging Markets ETF (ticker: VWO) and the iShares MSCI Emerging Markets ETF (ticker: EEM) both provide diversified portfolios but with meaningful differences in composition and costs.

Both funds maintain significant exposure to the world’s largest emerging economies: China, Taiwan, India, and Brazil. However, a key distinction emerges in their treatment of South Korea. The iShares fund includes substantial South Korean holdings, while the Vanguard fund does not classify South Korea as an emerging market.

This difference in geographic exposure has had meaningful performance implications. The iShares fund charges an expense ratio of 0.72%, while the Vanguard alternative costs only 0.06%—a ten-fold difference in annual fees. Over the past twelve months, the iShares fund has returned 42% versus 30% for the Vanguard option, with the outperformance largely attributable to the inclusion of memory chip manufacturers Samsung and SK Hynix. The artificial intelligence boom has created exceptional demand for semiconductor memory, driving strong performance for both companies.

Over longer time horizons, however, these performance differences have compressed. Comparing five-year returns, both funds have delivered nearly identical results as the Vanguard fund’s substantially lower expense ratio has offset the iShares fund’s higher-beta positioning toward semiconductor stocks. For patient investors committed to long-term emerging market exposure, either option represents a reasonable choice, though the Vanguard fund’s cost structure provides an advantage for buy-and-hold investors.

Balancing U.S. and Global Equities: A Practical Framework

While Peter Oppenheimer’s Goldman Sachs analysis and broader market trends suggest emerging markets warrant increased allocation consideration, a fully indexed approach demands prudent diversification. The United States maintains clear advantages in technological innovation and remains the global leader in developing transformative technologies, from semiconductors to artificial intelligence.

A balanced approach suggests maintaining a meaningful allocation to U.S. equities, potentially through an S&P 500 index fund, while simultaneously increasing exposure to international and emerging market alternatives. The current valuation environment and Peter Oppenheimer’s ten-year forecasts suggest a more balanced geographic allocation than has been optimal during the recent period of U.S. market dominance.

The shift in relative valuations and the long-term growth prospects identified by Goldman Sachs analysts indicate that investors willing to look beyond U.S. borders may be rewarded handsomely in the years ahead. However, the enduring U.S. technological edge suggests that abandoning domestic equities entirely would be equally misguided.