With its origins dating back to the protests over the Vietnam War, the slogan ‘America, love it or leave it’ encouraged people to accept and support the country’s values and policies or, quite frankly, get out quickly.
Investors are having to grapple with the same decision when it comes to the world’s largest economy in 2025. Donald Trump has created fear over the long-term damage his trade policy could inflict on the economy, with growing concerns on areas such as rising inflation and falling growth figures.
By contrast, the proposed $1.2trn European fiscal bazooka, plus China’s economic recovery and its rise as a tech leader, are giving investors valid alternatives. Recent research from Morningstar shows Asian and European investors put $2.5bn into world ex-US mutual funds and ETFs between the start of December 2024 and the end of April 2025.
Meanwhile, April figures for the Bank of America Global Fund Manager Survey show the allocation to US equities fell to a net 36% underweight – the biggest underweight since May 2023 – and a 53 percentage-point fall in the US equity weighting since February 2025, the biggest two-month decline on record.
This is the market investors have relied upon for the past 15 years – with returns from the S&P 500 in excess of 600%, dwarfing anything produced by any other major economy. But the question now is whether investors can rely on it from here onwards or should look to diversify amid rising volatility.
We know these returns have been driven in large part by tech companies in recent years. The Magnificent Seven represent over 20% of the MSCI All Countries World Index and over 27% of the S&P 500.
Only 26% and 27% of the S&P 500 constituents outperformed the index in 2023 and 2024, respectively – a smaller figure than seen during the dot.com bubble.
Lofty price regardless of rising volatility
Research from Orbis showed that nearly half of the S&P’s annualised return of 13.8% in the past 15 years came from rising margins (2.5%) and valuations (3.6%). To achieve the same returns in the next 15 years net margins would need to reach 18% and valuations would need to reach 40x earnings.
Having previously produced strong returns in a goldilocks scenario of low rates and continued innovation (specifically from those tech giants), it would be a brave person who would back the S&P 500 to repeat the trick. The reality is very different as Lazard Global Equity Franchise co-manager Bertrand Cliquet points out.
Bertrand says his fund has held an average of around 60% in the US over the long term but the near-‘safe-haven’ status it has enjoyed in recent years - courtesy of a strong currency and lower interest rates - has been replaced by one of uncertainty, with erratic changes in policy and a lack of visibility. As a result, the allocation is now closer to 40%.
“We are all about good franchises but being picky on valuation. The opportunity set in the US is drying up and increasing elsewhere. There is also rising uncertainty (the likes of tariffs) and it would be foolish of us to predict the outcome,” he says.
Global funds are often seen as the best one-stop-shop for an investor who wants a broad exposure to equities but, as I am sure many of you will know, the MSCI World now has around 71% in the US alone and even active funds will often have a significant bias towards the US economy and those aforementioned tech giants.
But with 550 funds to choose from, there are a number of alternative ways to gain exposure to the global economy, without having a huge skew towards the US.
With this in mind, here are four you may want to consider:
JOHCM Global Opportunities – 42.6% in US equities
Manager Ben Leyland has a strong bias towards larger and medium-sized multi-national businesses in his portfolio, which typically holds 30-40 stocks.
The philosophy of this fund is 'heads we win, tails we don't lose too much', and if markets do struggle, the fund’s strict valuation process will help in this regard. The JOHCM Global Opportunities fund also can, and will, hold large cash positions if valuations are unattractive.
It has returned 52.7% to investors in the past five years and currently holds reasonable exposure to the likes of German and French (both 12%) and Japanese (9%) equities.
IFSL Evenlode Global Equity – 50.7% in North American equities
IFSL Evenlode Global Equity focuses exclusively on 'quality' companies, which are characterised by their ability to achieve sustainable growth over time while minimising the need for additional capital reinvestment.
The final portfolio consists of 30-50 stocks with a further five or so on a watchlist that are modelled, researched and considered for inclusion in the short to medium term.
Launched in July 2020, the fund has returned 34.6% in the past three years and currently has 26% and 21% in European and UK equities respectively. Top holdings currently include names like L’Oreal, Diageo and London Stock Exchange Group.
WS Montanaro Global Select – 47% in US equities
WS Montanaro Global Select is an unconstrained quality growth strategy that scours the globe in search of the best small and mid-cap companies. The outcome of this process is a high-conviction portfolio of between 25-40 best ideas.
The fund has returned 42.4% in the past five years and currently has the likes of German aerospace company MTU Aero Engines (6%), Games Workshop (5.9%) and French biotech business Sartorious Stedim (5.4%) among its largest holdings.
Artemis Leading Consumer Brands – 27% in US equities
Launched in December 2023, Artemis Leading Consumer Brands is a flexible global thematic fund that seeks to capture the emerging middle class’s consumption of luxury brands.
It is a benchmark-agnostic, unconstrained portfolio targeting companies with robust brand strength, which helps create barriers to entry and gives them pricing power and greater profit margins, increasing the compounding growth opportunity.
Top holdings include the likes of Hermes, Franco-Italian eyewear specialist EssilorLuxottica and Ferrari.
Darius McDermott is managing director of FundCalibre and Chelsea Financial Services. The views expressed above should not be taken as investment advice.