Core Viewpoint - Global sovereign wealth fund executives are betting that European stock markets will outperform their U.S. counterparts over the next decade, indicating a potential loss of confidence in the long-term outlook for U.S. equities [2] Investment Strategy - The New Zealand Super Fund has a tactical overweight position in European stocks, which is its largest "overweight" compared to its reference portfolio, while underweighting U.S. stocks by 3.5% [2] - The fund's investment stance is based on the belief that European stocks, as measured by the STOXX Europe 600 index, are currently undervalued compared to U.S. stocks, which are perceived to be overvalued [2][4] Market Valuation - The current price-to-earnings (P/E) ratio for U.S. stocks is approximately 27.5, indicating overvaluation, while European stocks have a P/E ratio of about 16 [4] - Over the past decade, the S&P 500 has outperformed European counterparts with a total return increase of over 310%, compared to a 115% increase for the STOXX Europe 600 [4] Performance and Risk Management - The New Zealand Super Fund has been one of the best-performing sovereign wealth funds over the past 10 and 20 years, achieving an annualized return of over 10% [4] - The fund employs a "full portfolio" approach to assess risk across the entire investment portfolio, allowing for greater flexibility compared to traditional strategic asset allocation methods [4] Private Equity Focus - The New Zealand Super Fund's preference for Europe extends to private equity, where it sees "good opportunities" and seeks to partner with younger, more ambitious fund managers [5] - Approximately 5% of the fund's portfolio is allocated to private equity, although it is not expected to become a large structural component of the investment strategy [5]