Why Investors Are Looking Beyond The U.S. Market

Market Performance - International equities outperformed U.S. equities in 2025, with developed international markets gaining 32% and emerging markets posting 34%, compared to the S&P 500's return of nearly 18% [1] - This trend of international markets outperforming the U.S. is expected to continue into 2026 and beyond [1] Investor Behavior - Investors are increasingly diversifying their portfolios by increasing exposure to global markets due to rising fiscal and geopolitical risks in the U.S. [3] - Conversations with investors indicate a strong interest in understanding how to reduce concentration in U.S. markets, particularly in U.S. private markets [3] Economic Factors - The U.S. dollar weakened by more than 9% in 2025 and is expected to weaken further, motivating investors to buy more international stocks [7] - A weaker dollar enhances the value of overseas profits when converted into U.S. dollars, boosting returns for international investments [8] Market Sentiment - There is a growing sentiment that the U.S. market is facing uncertainty, particularly with large companies transitioning from asset-light to asset-heavy models, leading to concerns about future returns on capital [4] - The "Sell America" sentiment reflects fears of a weaker dollar, higher U.S. interest rates, and deteriorating relations with trading partners, although this trend has not gained significant momentum recently [6] Long-term Outlook - Global markets are expected to continue outpacing the U.S. market, with forecasts suggesting years of international outperformance [9] - Many global investors are considering how to diversify their investments away from the U.S. and are looking for long-term opportunities in non-dollar-denominated markets [10]