Deep Value’s Second Act: International Discounts Remain Extreme

GMO argues that despite a strong rally in non-U.S. equities, international deep value stocks still trade at unusually depressed levels relative to U.S. markets and broader global equities. 

• Developed non-U.S. equities trade at roughly 25–50% discounts to U.S. stocks across multiple valuation metrics.
• GMO believes the most attractive segment is deep value, where discounts remain historically wide even after recent outperformance.
• Its GMOI ETF trades at 11.2x forward earnings, around 29% cheaper than the MSCI World ex-U.S. Index.
• The firm combines deep valuation screens with quality and profitability filters to avoid classic value traps.

The opportunity may no longer be simply “international equities.” GMO’s argument is narrower—and more aggressive: deep value still looks structurally underowned.