For most of the past decade and a half, investors had it pretty easy: Own U.S. large-cap stocks, tilt toward technology and collect the returns. Cha-ching.

That playbook isn’t working so well these days.

In 2025, the S&P 500 had a 16.4% price return, a solid year by any measure. Still, international stocks did better. The MSCI All Country World ex-USA index gained 29.3%, handily outpacing the S&P, while the U.S. dollar fell roughly 9.4%, its worst year since 2017.

International Stocks’ Outperformance Continues

Even after double-digit outperformance of international stocks in 2025, Fidelity’s asset allocation research team noted that non-U.S. stocks were still about 35% cheaper than U.S. shares on a forward price-to-earnings basis, and that the dollar’s decline may not be over.

“On a longer-term basis, there’s room for the dollar to go lower,” says Jake Weinstein, senior vice president of Fidelity’s asset allocation research team, in a December report, “International stocks reignite.”

Here are some investments that may be worth tracking heading into the second quarter of 2026:

U.S. Large-Cap Growth Stocks

This asset class outshone many others in recent years. In particular, stocks tied to artificial intelligence delivered extraordinary returns, says Didine Erskine, a certified financial planner （CFP） and visiting lecturer at Texas A&M AgriLife.

“The challenge now is that valuations have risen well above long-term averages, meaning future returns will likely depend more on earnings growth than investor enthusiasm,” she says.

The broader S&P 500 has been led by growth in recent years, but the more focused iShares S&P 500 Growth ETF （ticker: IVW） outperformed the wider index in 2025 and is underperforming this year. The IVW ETF has a beta of 1.18, meaning it’s about 18% more volatile than the S&P 500.

Growth is a key component of a balanced portfolio, but investors who have been spoiled by its long-term strength may have to rebalance. “For diversified portfolios, the focus is shifting toward maintaining exposure while avoiding excessive concentration,” Erskine says.

U.S. Small- and Mid-Cap Value Stocks

These stocks are trading at some of the widest discounts, relative to large caps, in decades, says Erskine. State Street Global Advisors made the case in late 2025 that smaller-company stocks still looked unusually cheap, even after the market’s rebound.

In a December 2025 exchange-traded fund outlook, State Street analysts noted that small caps were trading at a 36% discount to large caps based on next-12-month price-to-earnings ratios, the widest valuation gap in 20 years.

In other words, investors were still paying up for big companies while leaving much of the smaller-company universe behind. Historically, valuation gaps like these tend to narrow as earnings growth broadens beyond the largest companies in the market, Erskine says.

“If leadership begins to expand beyond mega-cap technology names, this segment could play an important role in diversification and potential return,” she adds.

International Developed Equities

Although the war in Iran and other economic factors have been pressuring various asset classes, some developed markets outside the U.S. are continuing to outperform. For example, the FTSE Developed All Cap ex US Index, tracked by the Vanguard FTSE Developed Markets ETF （VEA）， has outperformed the S&P 500 so far in 2026.

“International developed markets, particularly Europe and Japan, are benefiting from improving corporate profitability and more attractive valuations relative to U.S. equities,” Erskine says.

“After many years of U.S. market dominance, global diversification is starting to show its value again,” she adds. “For long-term investors, international exposure helps reduce reliance on a single economy or market cycle.”

Emerging-Market Equities

Emerging-market stocks are typically more volatile than their developed-market counterparts, and often finish a year with dramatically different results.

For example, the iShares MSCI Emerging Markets ETF （EEM） returned 34% in 2025, far ahead of the S&P 500. This year, it’s showing small gains while the S&P 500 is down about 5% year to date, as of March 20.

“Emerging-market equities may be the next play for investors seeking new opportunities to offset a decline in the U.S. market,” says Angelo DeCandia, professor of business and accounting at Touro University in New York.

DeCandia cites the Morningstar Emerging Markets Index, which gained just 83% in cumulative gross returns between 2010 and 2024, while the Morningstar U.S. Market Index rose nearly sixfold. However, he adds, performance over the past year may indicate that a shift is underway.

“The political turmoil of the U.S. combined with a weakening dollar may reverse past performance for both sectors,” he says. “And for investors who are simply seeking a diversification bet against the U.S. equity market, the time may have arrived.”

U.S. Investment-Grade Bonds

Bonds are also having a moment, finally paying enough to matter again.

As of March 20, the iShares 5-10 Year Investment Grade Corporate Bond ETF （IGIB） has a 30-day SEC yield of 4.95%, with a 5.21% average yield to maturity.

Meanwhile, J.P. Morgan Asset Management said in its 2026 Long-Term Capital Market Assumptions forecast that U.S. investment-grade credit would return 5.2%. For investors who got used to bonds just sitting around doing next to nothing, today’s yields represent a real reset.

“For the first time in 15 years, an advisor can build a portfolio of A-rated corporates yielding 5% and maturing with known maturity dates and liquidity,” says Charles Urquhart, a chartered financial analyst who is the founder of Fixed Income Resources in Annapolis, Maryland.

“The old way of thinking saw bonds as unable to deliver high returns,” he adds. “At 5%, they don’t need to.” Urquhart cites Morningstar data showing that taxable-bond funds pulled in $91 billion in January 2026, the second-largest monthly inflow on record.

Treasury Inflation-Protected Securities

These are U.S. government bonds with principal value that adjusts with inflation, as measured by the consumer price index. The interest rate is fixed but applied to that inflation-adjusted principal, meaning interest payments can rise as well.

Urquhart points out that real yields for five-year TIPS are above 2%. “Most advisor portfolios do not have any inflation protection,” Urquhart says, adding that TIPS deserve more attention now that investors can lock in a real yield above inflation.

He notes that inflation risks have not gone away: Oil prices have been elevated because of the Middle East conflict. （As of midday March 23, oil prices had fallen 11% after President Donald Trump called off strikes on Iranian power plants to allow for talks between Washington and Tehran.）

The core personal consumption expenditures （PCE） index, one of the Federal Reserve’s main inflation gauges, also remains elevated.

Gold and Precious Metals

Precious metals can give investors a hedge against inflation, currency weakness and broader market stress. Gold tends to be a steady option, while silver adds more upside potential, though it has more potential for volatility.

“Central banks have been hoovering up gold for the past two years, and retail investors should take note,” says Paul Williams, managing director at Solomon Global in London.

“Gold is a time-tested asset that has historically preserved purchasing power. It can provide stability and security during times of uncertainty and helps diversify a portfolio by acting as a hedge against inflation and currency devaluation,” he notes.

Williams adds that silver typically follows gold’s direction and shares many of gold’s safe-haven credentials, but tends to move with greater intensity. Its gains, as well as pullbacks, can be magnified.

“With the current high price of gold, silver provides a more accessible route for retail investors to gain exposure to precious metals and benefits from its role in electronics, solar panels and other industrial applications,” Williams says.

Commodities

This asset class is often used as a diversifier in traditional stock and bond portfolios. The Invesco Optimum Yield Diversified Commodity Strategy No K-1 ETF （PDBC） is heavily weighted in gold, but other top positions include Brent crude and WTI crude, both of which have risen sharply, as well as copper, natural gas, oil and corn. Oil and gold, especially, have given this ETF a boost. It’s returned 30.8% year to date; it lagged the S&P 500 in 2025.

“Commodities have quietly delivered strong performance this year as geopolitical tensions, supply constraints and energy demand continue to influence prices,” Erskine says. “In addition to traditional commodity exposure, investors are increasingly exploring a broader set of alternative assets, including digital asset exchange-traded products, though their role in diversified portfolios is still evolving.”

Defense Industry Stocks

In a 2025 report, Morgan Stanley’s Ellen Zentner, chief economic strategist and global head of thematic and macro investing, wrote that rising global defense commitments and new military technologies could unlock hundreds of billions in additional spending. That helps bolster the longer-term case for defense-related stocks.

The Invesco Aerospace & Defense ETF （PPA）， pegged to the SPADE Defense Index, has been on a tear. It finished 2025 with a gain of 37.1% and has advanced 8% so far in 2026. Its largest holdings are Lockheed Martin Corp. （LMT）， RTX Corp. （RTX）， Boeing Co. （BA） and GE Aerospace （GE）。

“The invasion of Iran has provided another tailwind to a sector that has beaten the market handily over the past 25 years,” says Scott Sacknoff, president of SPADE Indexes.

Infrastructure Stocks

Spending on power grids, ports, pipelines and digital infrastructure is picking up.

In a February 2026 report, “2026 M&A Trends: Navigating a Rapidly Rebounding Market,” McKinsey analysts Jake Henry and Mieke Van Oostende wrote, “With large tech firms expected to spend nearly $400 billion on infrastructure this year, AI spending ranks as one of the biggest investment booms in modern history.”

Also, in an October 2025 paper, “The Real Asset Shift: Looking Beyond Book Value Amid Market Changes,” PwC consultants found, “Reshoring and nearshoring are increasing demand for logistics infrastructure, ports and rail, utilities and reliable domestic power,” and “trillions are needed for renewables, storage, grid modernization, transmission, flexible generation, EV charging and efficiency, creating a deep pipeline of investable projects.”

Infrastructure investments overall are gaining attention as governments and private investors increase spending on energy systems, transportation networks and digital infrastructure. The Global X U.S. Infrastructure Development ETF （PAVE） has been slumping with other global asset classes recently, but has returned 27.8% over the past 12 months and is outpacing the S&P 500 by seven percentage points as of March 20.

“Assets tied to power grids, pipelines and data infrastructure often benefit from long-term demand and durable cash flows, which can make them attractive for investors seeking exposure to the physical backbone of the economy,” Erskine says.