Can global equities benefit you in any environment?

Current political circumstances and geopolitical events can always provide reasons for investors to think twice about diversifying globally.

- KONDI NKOSI

But is that thinking valid? A closer inspection reveals it may not be.

Even before this year's political news took shape, investors may have been concerned about global equities.

The outsized performance of the "Magnificent Seven" (Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla) has left the US equity market focused on a small group of megacap tech companies, while their performance has left major global equity indexes highly concentrated in the US.

The current political and geopolitical turmoil only provides further reasons to consider maintaining a domestic bias.

The daily headlines are filled with ominous news about tariffs, and the overall global state of geopolitical tension is high. Are these sufficient reasons for investors to avoid or minimise exposure to global equities? In our view, they are not, and in fact there are plenty of reasons to stay globally diversified.

Impact of tariffs is not uniformly negative

Increased US tariffs affect economies around the globe, and they could lead to a greater weaponisation of trade in the pursuit of political objectives.

A key point to remember, though, is that not all countries will be affected similarly. Some regions, and leading companies within them, could benefit from the disruption the trade battles create.