Why Top Investment Firms Are Betting on Global Stocks Through 2035

📉 The End of U.S. Stock Market Dominance?

It’s bold. It challenges the recency bias. And the shift is already unfolding beneath the surface.

Top hedge funds like Bridgewater Associates, asset giants like BlackRock, and legendary investors at firms like GMO and Fidelity are repositioning for what could be the biggest equity shift in decades: a long-term outperformance of global (non-U.S.) stocks over U.S. stocks through 2035.

If your portfolio leans heavily toward U.S. assets, this post offers valuable insights and a roadmap to help you explore diversification opportunities.

🕰️ A Look Back: Markets Have Always Rotated

While the U.S. has dominated since the 2010s, history tells us leadership is cyclical:

📈 Japan in the 1980s:
Fueled by rapid industrialization and a booming export economy, Japan’s stock market soared. By 1989, the Nikkei 225 index peaked at 38,915.87, and Japanese equities accounted for approximately 45% of the global stock market capitalization, surpassing the U.S. at that time. Wikipedia

🌎 Emerging Markets in the 2000s:
From 2001 to 2010, emerging market stocks (e.g., Brazil, China, India) outpaced U.S. stocks by a healthy margin. This was the “BRIC decade,” with the MSCI Emerging Markets Index delivering over 15.9% annualized returns. AllianceBernstein

🔄 U.S. in the 2010s:
Fueled by tech innovation, quantitative easing, and low interest rates, the U.S. became the clear outperformer. But dominance is not permanent, and as global cycles shift, so too does leadership.

📌 Bottom line: Don’t assume today’s leader is tomorrow’s winner. Diversification isn’t just about reducing risk—it’s about staying positioned for what’s next.

🌐 Why Global Markets May Outperform: 5 Key Drivers

📊 1. U.S. Stocks Are Overvalued, Relatively

As per AQR’s research: U.S. equities have led global markets for over a decade, but nearly 80% of that outperformance was driven by valuation multiple expansion, not superior earnings growth. Today, U.S. stocks trade at nearly twice the valuation of their international peers, leaving less room for upside and more potential for mean reversion.
🔗 AQR: Exceptional Expectations – U.S. vs. Non-U.S. Equities

💵 2. Rising Rates Favor Value, Not U.S. Tech

Low rates helped U.S. tech soar. But with inflation and rate hikes, markets are favoring value sectors—industrials, banks, energy—heavily represented in Europe, Japan, and Emerging Markets (EM).
🔗 Bridgewater: Our Approach to Investing in a New Macro Environment

🌏 3. Emerging Markets = Younger, Faster-Growing

By 2030, emerging markets are projected to surpass the U.S. in global equity share—driven by demographics, urbanization, and rising consumer classes.
🔗 Goldman Sachs: The Path to 2075 – Capital Market Size & Opportunity

⚙️ 4. De-globalization Creates New Winners

Global supply chains are undergoing a strategic realignment.

• India, Vietnam, and Mexico are key beneficiaries of nearshoring, friendshoring, and supply chain diversification, as firms reduce reliance on China.

• This shift is driving foreign direct investment, job growth, and manufacturing expansion—supporting long-term earnings growth in frontier and emerging equity markets.

🏦 5. Policy Shifts Favor International Markets

• Europe is deploying major fiscal programs tied to defense, infrastructure, and energy independence.

• Japan is advancing corporate governance reforms and beginning monetary normalization after decades of deflation.

• Emerging Asia, particularly parts of ASEAN, is maintaining dovish or pro-growth stances to support domestic expansion.

• Meanwhile, the U.S. faces high debt levels, elevated rates, and fiscal tightening pressures—limiting its policy flexibility.

💼 How Top Firms Are Responding

🔹 Bridgewater: Citing “exceptional risks” to U.S. assets, the firm is reallocating toward emerging markets, inflation hedges, and diversified multi-asset strategies. https://www.bridgewater.com/research-and-insights

🔹 BlackRock: Overweighting international equities, emphasizing Europe’s economic resilience and Asia’s structural growth potential in the post-COVID era.

🔹 Fidelity: Highlights long-term drivers such as emerging market consumer demand and Asia’s accelerating tech innovation as key themes for global growth.

🔹 GMO: Forecasts negative real returns for U.S. large-cap equities over the next 7 years, while projecting +6% to +9% annualized returns for emerging market value stocks. https://www.gmo.com/americas/research-library/gmo-7-year-asset-class-forecast-april-2025_gmo7yearassetclassforecast/

🔹 Capital Group: Targeting overlooked international opportunities in healthcare, infrastructure, and clean energy tech.

📊 Also See: Goldman Sachs Global Investment Research – Future Outlook on the World’s Largest Economies https://www.gspublishing.com/content/research/en/reports/2023/06/08/50ccfb98-b82c-4ba6-976d-d541f83239be.html

✈️ Where the Opportunity Lies: Region by Region

Not all non-U.S. markets are created equal. Here's where top investment firms see the strongest long-term potential:

🇪🇺 Europe: The Value Engine

• Valuations remain well below U.S. levels, with many companies—especially in financials and industrials—trading at or below book value.

• Aggressive fiscal investment in infrastructure, defense, and green energy is revitalizing key sectors.

• High-quality dividend payers (notably in healthcare and consumer staples) offer strong cash flows and downside protection.

🇯🇵 Japan: Corporate Renaissance

• Corporate governance reforms, backed by the Tokyo Stock Exchange and policymakers, are fueling improved capital efficiency, buybacks, and dividend growth.

• Japan is finally emerging from decades of deflation, with rising wages and inflation expectations supporting domestic demand.

• Cash-rich industrial and automation leaders are well-positioned to meet regional and global manufacturing needs.

🌏 Emerging Markets: Growth, Youth, and Scale

• EMs are projected to grow from ~27% of global market cap today to 35% by 2030 (Goldman Sachs – “The Path to 2075”).

• India is expected to jump from 3% to 8% of global market cap by 2050, driven by demographics, tech adoption, and economic reform.

• Sectors like consumer tech, fintech, healthcare, and digital infrastructure are expanding rapidly across Asia, Africa, and LATAM.

🇲🇽 Latin America & Mexico: The Nearshoring Dividend

• Mexico is a top beneficiary of U.S.–China supply chain realignment, with surging FDI and exports in autos, electronics, and industrial goods.

• Brazil and Chile offer exposure to key global resources like copper, lithium, and energy, benefiting from dollar weakness and attractive valuations.

• Inflation has peaked across much of the region, and central banks are poised to cut rates, supporting local equities and credit markets.

✅ What Should Investors Do?

💡 1. Diversify Globally
Consider rebalancing toward a more globally diversified portfolio—or even overweighting international equities to capitalize on attractive valuations and under-appreciated growth trends.

💡 2. Tilt Toward Value & Dividend Stocks
Many international markets are concentrated in financials, materials, energy, and industrials—sectors that often outperform in higher-rate, inflationary, or late-cycle environments.

💡 3. Focus on Thematic Growth Abroad
Trends like rising consumer demand, infrastructure modernization, and non-U.S. tech innovation (including AI) are driving a new cycle of global leadership.

💡 4. Use Active Management Selectively
In less efficient markets like India, Brazil, and Mexico, skilled active managers can uncover under-the-radar growth opportunities and better navigate political or currency risks that passive indexes may overlook.

🙋‍♀️ Frequently Asked Questions

❓Is this a short-term trend or a long-term shift?
📅 Most top firms are positioning for the next decade or more—not just a short-term reversion.

❓Will the dollar affect returns on foreign stocks?
💱 Absolutely. A weakening U.S. dollar boosts returns on unhedged international investments, adding a potential tailwind.

❓Is investing in emerging markets risky?
🌍 Emerging markets carry higher volatility, geopolitical uncertainty, and currency risk. But for long-term investors who diversify across regions, apply disciplined sizing, and focus on quality, the risk-adjusted return potential can be compelling—especially given favorable demographics and valuations.

🚀 The Bottom Line: Don’t Rely on Yesterday’s Winners

Markets evolve. So should your portfolio.

The world’s top investors aren’t clinging to yesterday’s U.S. leadership—they’re considering reallocating ahead of a new cycle.

📌 This isn’t panic. It’s preparation. You don’t need to overhaul your portfolio overnight—but turning a blind eye to these shifts? That’s a risk that could undermine your long-term goals.

📘 Important Disclosure:
The information provided is for educational purposes only and does not constitute personalized investment advice. Investors should evaluate suitability based on their individual objectives, time horizon, and risk tolerance. Investors should perform their own due diligence or consult a qualified financial professional before making any investment decisions. All investments carry risk, including the potential loss of principal. Past performance does not guarantee future results.