Why Investors Are Looking Beyond The U.S. Market

Why It Matters

A sustained outperformance of global equities forces investors to diversify away from U.S.-centric, AI‑heavy portfolios, reshaping capital allocation and risk management strategies worldwide.

Key Takeaways

• International equities outperformed U.S. in 2025, gaining 32‑34%.
• Investors seek diversification amid U.S. fiscal, geopolitical risks.
• Concentration in AI‑heavy “Magnificent Seven” raises exposure concerns.
• Weakening dollar boosts foreign earnings when converted to dollars.
• Emerging markets expected to continue outperformance into 2026.

Summary

The video examines why investors are shifting capital beyond the United States as international equities outpaced the S&P 500 in 2025—developed markets rose 32% and emerging markets 34%, while the S&P delivered just under 18%. Analysts cite a confluence of factors: heightened fiscal deficits, geopolitical tensions, and a weakening dollar that makes foreign earnings more valuable in dollar terms.

Key data points reinforce the trend: the U.S. market’s concentration in the “Magnificent Seven” AI‑heavy stocks now represents roughly one‑third of the index, raising concentration risk. Investors also fear a potential “Sell America” scenario—higher U.S. rates, a softer dollar, and strained trade relationships—that could further erode domestic returns. The dollar’s 9% decline in 2025 and expectations of continued depreciation are prompting a search for higher‑yielding, non‑dollar‑denominated assets.

Notable remarks from the reporter include, “I am short the U.S. and I’m long global markets,” underscoring a tactical tilt. The discussion of “Sell America” and the impact of the Liberation Day tariffs illustrate how policy shocks can accelerate the move abroad. Emerging markets, buoyed by lower U.S. rates and a weak dollar, are highlighted as the standout beneficiaries.

The implications are clear: portfolio managers will likely increase exposure to developed and emerging markets, rebalancing away from AI‑centric U.S. equities toward diversified global assets. This shift could reshape capital flows, pressure U.S. market valuations, and elevate the importance of currency risk management for long‑term investors.

Original Description

International equities grabbed attention last year as they outpaced U.S. stocks, reversing the U.S. market’s long-standing dominance. The S&P 500 returned nearly 18%, while developed international markets gained 32% and emerging markets rose 34%. The trend looks set to continue into 2026 and beyond. Investors are taking note, increasing their exposure to global markets. CNBC’s Sarah Min breaks down the key reasons many are looking beyond the U.S. market.

Produced and Edited by: Jeff Huang

Reporting by: Sarah Min

Animation by: Emily Park, Jason Reginato

Managing Producer: Anuz Thapa

Senior Director of Video: Lindsey Jacobson

Additional Footage: Getty Images

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Why Investors Are Looking Beyond The U.S. Market