The ASX 200 finished 2nd last out of 24 major stock indices in 2025. Is it costing you returns?

As part of the Livewire Outlook Series, we recently released the results of our readers' market predictions and intentions for 2026 and one insight stood out. 

Despite the global stock market convincingly outperforming the ASX in 2025, only a net 6.9% of our readers planned on increasing their international share exposure in 2026. Not only that, but 46.1% planned on keeping their international exposure the same. 

It shouldn't come as much of a surprise: Australian investors' home bias is well-documented. 

According to the most recent ASX Australian Investor Study, 58% of investors held Australian stocks but only 16% of investors hold international stocks.

And there are plenty of good reasons for this. The ASX has shown reliable long-term growth, is dominated by a number of stable blue chip companies and pays solid franked dividends.

There's also the fact that Australia itself is a prosperous, stable democracy and that investing locally means investors can avoid currency conversion issues and simplify their tax reporting. 

But there's one glaring issue with our enduring commitment to the Australian stock market - it means we're giving up better gains elsewhere. 

By my count, the ASX underperformed effectively every comparable index in the developed (and developing) world in 2025. 

And yet if you had asked the average Australian investor in January 2025 whether the ASX's prospects were brighter than those of the Turkish, Indonesian and Indian stock markets in the year ahead, I'm sure the answer would have been a resounding yes. 

In fact here is a non-exhaustive list of all the global stock markets that have outperformed the S&P/ASX 200 (XJO) over the last year, according to TradingView:

• South Korea (Korea Composite Stock Price Index)
• South Africa (South Africa Top 40 Index)
• China (Shenzhen Component Index)
• Japan (Japan 225 Index)
• Brazil (Bovespa Index)
• Mexico (S&P/BMV IPC Index)
• Canada (S&P/TSX Composite Index)
• Italy (Milano Italia Borsa Index)
• Indonesia (IDX Composite Index)
• Turkey (BIST 100 Index)
• Germany (DAX Index)
• Europe (STOXX 50)
• UK (FTSE 100 Index)
• USA (S&P 500)
• France (CAC 40 Index) 
• Argentina (S&P Merval Index)
• India (Nifty 50 Index) 

And here's the list of the stock markets that underperformed the ASX 200:

• Tadawul All Shares Index (Saudi Arabia)

Of this list of 24 "major world" indices tracked by TradingView, the picture doesn't look much better for the ASX over longer timeframes. 

Over the last 5 years, the S&P/ASX 200 ranks 20th of 24 in terms of performance, with only Saudi Arabia, China and Indonesia faring worse. 

Adding dividends to the mix, the ASX 200 total return (XNT) ends up finishing mid table (and this is without factoring in the dividends of the other indices) 

Over the last 10 years, the S&P/ASX 200 ranks 19th of 24, ahead of only the UK, Mexico, Indonesia and China performing worse. 

Again, adding dividends to the mix sees it still finish in the bottom half. 

The ASX 200's total return also lags that of the MSCI World Index over the last one year, five years and 10 years. Given that that World Index tracks large and mid caps across developed markets (i.e. the ASX's bread and butter), it's a bit sobering, given the consensus amongst most investors would be that the ASX 200 has performed well over the last decade, where other developed markets (ex US) have struggled. 

And this is ignoring the bigger opportunities in non-developed global markets. 

The MSCI ACWI IMI Index, which impressively covers 99% of the global equity investment set (and should therefore be held up as the gold standard for global comparisons) has returned 26.69% over the last 12 months. 

The ASX 200 (total return) has managed a relatively-pitiful 11.17%. 

Ultimately, Australian investors are effectively leaving money on the table with their loyalty to the ASX. And given how over-exposed the average Australian is by default to the Australian economy through their housing, superannuation and employment, global exposure shouldn't be a nice-to-have but a necessity. 

In fact, there's a compelling argument that Australian investors are actually getting a raw deal by only investing in Australian equities.

As my colleague Vishal Teckchandani wrote in Livewire's Long-Term Investing Report, over 20 years, the ASX underwhelms on growth:

"The ASX 200 produced middle-of-the-pack returns for the level of risk investors took. According to Bell Potter, Australian equities have carried a higher level of volatility than global markets over the past decade, yet delivered lower returns."

This is not to say that the ASX won't be a happy hunting ground in 2026, especially given the strong outlook for resources. But for investors who find themselves overly-concentrated in Australian stocks, this year might be the time to reassess why that is the case. 

With the growing availability of global-focused managed funds, global ETFs and the rise of low-cost trading platforms, there's really no excuse for any investor not to be casting an eye overseas in the search for better returns.