Case for diversifying beyond the American market

For many years, the United States, representing around 70% of the global equity market, has been perceived as the ultimate destination for investors seeking robust growth.

- Keagan Marcia

This perception has been significantly influenced by the performance of AI-enhanced companies, often referred to as the "Magnificent Seven", which have delivered a five-year annualised return of 47%. This contrasts with the broader S&P 500's increase of 16%.

A deeper look at global markets reveals a wide performance gap: China's markets have increased a mere 0.85%, Japan's Nikkei index has climbed 4.7%, the UK's FTSE 100 has grown by 5.7%, South Africa's FTSE/JSE by 7.6%, and Europe has emerged as the frontrunner outside the US with a 9% rise. The start of this year marked a significant turning point. In January, the pan-European Stoxx 600 index recorded its best outperformance against the S&P 500 for that month over the past decade, surging 6.3% compared to the S&P's 2.7%.

This bullish momentum extended into February, with the Stoxx 600 posting a 3.3% gain mid-month, outstripping the S&P 500's growth of 1.25%.