Julian McManus from Janus Henderson Investors noted a shift in investor sentiment towards international markets, driven by the dominance of the 'Magnificent Seven' U.S. tech stocks, which now represent nearly half of major indices.
This change contrasts sharply with the previous reluctance to invest overseas, as evidenced by the MSCI ACWI ex-US index's 8% year-to-date rise compared to the S&P 500's 6.8%. McManus emphasized that while there isn't a mass exodus from U.S. assets, the recent performance of international markets has prompted a reassessment of global allocations.
He pointed out that political factors have minimal influence on these decisions, as investors prioritize potential returns. McManus favors sectors such as European and Japanese banks, South Korean firms like Samsung Electronics, and Chinese companies including Tencent and CATL.
He believes these markets offer significant value, particularly as European banks improve profitability and Japanese financials benefit from rising interest rates. Additionally, McManus advocates for semiconductor suppliers over AI application companies, underscoring the essential role of semiconductors in AI development.
Ian Horne from Muzinich & Co. echoed this sentiment, suggesting that global diversification is becoming increasingly important amid market volatility. Conversely, some wealth managers, like Polka Mishra from Javelin Wealth Management, maintain a positive outlook on U.S. equities, citing strong economic growth and leadership in AI as key factors for continued investment in the U.S. market