MarketGrader Global Indexes: Q1 Performance Outpaces U.S. Equities

MarketGrader’s Global Indexes delivered a more resilient performance than their U.S. counterparts in the first quarter of 2026, with broad Developed Markets exposures posting positive returns and select Emerging Markets strategies benefiting from strong country-level performance. While volatility increased globally toward the end of the quarter, several international indexes outperformed their benchmarks, underscoring the importance of regional composition, country classification, and stock selection.

Developed Markets: Broad Strength with Standout Results in Japan and Israel

Performance across Developed Markets was generally positive during the quarter, particularly among broad and country-specific strategies. Both of our flagship Developed Markets indexes—the MarketGrader Developed Markets ex-US Index and the MarketGrader Developed Markets ADR 30 Index—returned 1.6% for the quarter, outperforming the MSCI World ex-US Index, which declined 0.8%. This translated into excess returns of 237 and 242 basis points (bps), respectively.

Country-level performance showed meaningful dispersion, with Japan among the clearest standouts. The MarketGrader Japan Large Cap 100 Index gained 9.3% in the quarter, outperforming the MSCI Japan Index by 776 bps. The MarketGrader Japan Small Cap 200 Index performed even better, returning 20.7% and exceeding the MSCI Japan Small Cap Index by 1,698 bps.

Our Israel indexes also continued their exceptional run. The MarketGrader Israel Large Cap 30 Index returned 12.8% in the quarter, outperforming the MSCI Israel Index by 1,020 bps, while the MarketGrader Israel All-Cap 40 Index gained 10.3%, ahead of the benchmark by 766 bps. Their one-year results remain even more striking: the Large Cap 30 Index has returned 97.2% over the last 12 months, beating MSCI Israel by 5,827 bps, while the All-Cap 40 Index has gained 81.9%, outpacing the benchmark by 4,301 bps.

The United Kingdom also contributed positively, with the MarketGrader UK Large Cap 50 Index returning 8.8% and outperforming the FTSE 100 by 538 bps. Canada posted solid gains as well, with both the MarketGrader Canada Large Cap 40 Index and the MarketGrader Canada Small Cap 60 Index generating positive returns and outpacing the respective MSCI Canada Indexes by 230 and 29 bps, respectively. Note that MarketGrader also calculates equally weighted versions of our two core Canadian Indexes, which have done even better than their market cap-weighted counterparts.

Not all developed markets participated equally. Australia was a notable laggard, with both the MarketGrader Australia Large Cap 30 and the MarketGrader Australia Small Cap 60 indexes posting double-digit declines during the quarter and underperforming their benchmarks. Both of our core Australia Indexes are equally weighted, which accounted for a large part of their underperformance in the quarter as investors favored larger companies within each size segment as they sought to ride out the market’s volatility.

From a longer-term perspective, performance across Developed Markets remains strong. The MarketGrader Developed Markets ADR 30 Index has gained 33.8% over the past 12 months, outperforming the MSCI World ex-US Index by 1,019 bps, while the MarketGrader Developed Markets ex-US Index returned 31.3%, ahead of the same benchmark by 771 basis bps.

Emerging Markets: Classification Matters

Emerging Markets were more challenging for MarketGrader’s broad indexes in the first quarter, but the headline comparison requires important context. Most of our broad Emerging Markets indexes exclude South Korea and Taiwan, because MarketGrader classifies both as developed economies rather than emerging markets. The MSCI Emerging Markets Index, perhaps the most widely followed emerging market benchmark, by contrast, includes both countries and gives them substantial weight. MSCI describes the MSCI Emerging Markets Index as covering large- and mid-cap companies across 24 EM countries, with Taiwan and South Korea among the index’s largest country allocations. MarketGrader’s own analysis of the iShares MSCI Emerging Markets ETF (EEM) shows Taiwan at 23.7% weight and South Korea at 15.4% as of April 15, 2026.

That distinction mattered in Q1. MSCI’s Taiwan and Korea country benchmarks posted strong gains through March 31, with the iShares MSCI Taiwan ETF (EWT) up 7.2% and the iShares MSCI South Korea ETF (EWY) up 16.2%. Against that backdrop, the MSCI Emerging Markets Index declined only 0.1% in the quarter, while MarketGrader’s broad EM indexes, which generally exclude those two markets, faced a more difficult relative comparison. The MarketGrader Emerging Markets 200 Index (EW) and Emerging Markets Country-Capped 200 Index (EW) declined 2.7% and 4.3%, respectively, trailing the MSCI Emerging Markets Index by 262 and 419 bps.

For investors who prefer to classify South Korea and Taiwan as emerging markets, MarketGrader also calculates the MarketGrader Emerging Markets (+ Korea & Taiwan) 200 Index. Unsurprisingly, given the strong Q1 performance of those markets, that index gained 3.0% in the quarter and outperformed the MSCI Emerging Markets Index by 309 basis points, extending its remarkable track record. It remains ahead of the MSCI Emerging Markets benchmark over one, three, and five years, with annualized excess returns of 353, 343, and 472 bps, respectively.

At the single-country level, results were mixed but included strong pockets of performance. Brazil stood out, with the MarketGrader Brazil All-Cap Growth Leaders Index gaining 20.6% and outperforming the MSCI Brazil Index by 147 basis points. China also showed strength in smaller companies, with the MarketGrader China Small Cap 200 Index rising 5.9% and outperforming the CSI 500 Index by 258 basis points.

India was weaker during the quarter, with both large- and small-cap indexes posting negative returns. Even so, several India strategies continue to show strong longer-term excess returns, including the MarketGrader India Growth Leaders 50 Index, which leads MSCI India by 845 basis points over one year, 963 basis points over three years, and 402 basis points over five years.

Taken together, the quarter’s Emerging Markets results reinforce the importance of understanding country classification and benchmark composition. MarketGrader’s standard EM framework is intentionally different from MSCI’s, particularly in its treatment of South Korea and Taiwan. The EM + Korea & Taiwan Index provides a useful comparison for investors who prefer the MSCI-style classification, while our standard EM indexes remain focused on what we consider a more precise definition of emerging-market exposure.

Download our latest MarketGrader vs. Benchmarks Report Card to see full results across all markets for the first quarter.