Andrew Fargus

The start of 2025 has witnessed a sharp reversal of the previous outperformance of US equities versus the rest of the world. We were already positioned to be underweight the US relative to global indices at around 40% of the overall equity portion of portfolios. This relative performance begs the question of whether it is time to increase our weighting to the US, in effect "buying the dip". We think not yet. Valuations in the US remain elevated, particularly in the technology sector, and investors have been wary of the potential impact of President Trump’s economic and trade policies.

Meanwhile European and Emerging Market equity markets appear to be the main beneficiaries of capital flows away from the US. We believe that these conditions could persist for some time.

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