I have been passively investing pre-tax in my 401k for 2.5 years - putting everything in this fund. Only today did I gain literacy on Target date funds vs index funds vs mutual fund and their pros and cons. From the above link I found out that the top 2 places where my money is being parked are:

#1 Russell 1000 Index Fund (47.61%)

#2 BlackRock MSCI ACWI ex-US IMI Index Fd E (31.52%)

#1 largely consists of the big tech and Fintech stocks (Facebook, Amazon, Microsoft, Visa etc) and the graph shows a solid growth till before the pandemic hit: 68% in the past 5 years and 185% in 9 years, as one would expect of these stocks. Moreover, most of this growth appears consistent.

On the other hand #2 seems relatively underwhelming at 20% growth in the past 5 years and 55% in 10 years. And, the graph is more cyclical. Another concern is that the dip due to the pandemic here is way more pronounced than the dip in #1 - it practically reached an all time low in 5 yrs.

I understand that graphs in #1 and #2 may not be identical due to less correlation b/w them and that is probably what they mean by diversification. But I'm trying to understand what is the rationale behind having such a sizeable portion of my investments to international markets when the US market clearly stands out in both 5 yr and 10 yr periods and are better at weathering the storm.

I chanced upon this ultimate-buy-and-hold-strategy from a sub where the author starts from the baseline of having a basic portfolio from S&P 500 and shows how a more complex strategy which also includes the international diversification can be beneficial. However it just seemed like a math black box to me. What I would really like is to get some intuition behind why something like this works, if possible.

Also, any feedback on this particular TDF is welcome. Thanks :)