Concerns are growing among investors as discussions around the potential decline of American market dominance intensify. Historically, the United States has been seen as a bastion of investment stability, with expectations that assets in US markets would yield superior returns compared to those in international markets. However, recent trends suggest that this long-held belief may be wavering, as investors grapple with challenges such as rising inflation, escalating national debt, and increased geopolitical tensions.
Data reflecting the shifting perception of US markets reveals significant developments. The S&P 500 has experienced its worst start to a year in decades, with its performance lagging notably behind the MSCI World Index—the widest gap recorded in over 30 years. Hedge fund manager Rob Citrone highlighted this trend when he remarked that, over the past year, dollar-based asset returns in the US have been the weakest compared to 19 other global markets, placing the US dead last. He noted that returns from US markets were approximately 30% lower than those seen in emerging markets, underscoring a widening performance gap.
The trend of global investors moving away from US equities is further substantiated by a recent Bank of America Global Fund Manager Survey. In February, it reported the largest recorded shift away from US stocks since 2021, noting that investors had decreased their positions in US equities by an average of 20 percentage points from the previous month. This reflects a notable trend where investors increasingly pour capital into the Eurozone and emerging markets instead of US assets.
The sentiment towards “Sell America” is growing, as many investors perceive potential future headwinds stemming from persistent inflation and the rising federal deficit. Prominent fixed-income investor Jeff Gundlach has advised clients to avoid US markets and advocate for exposure to international stocks denominated in non-dollar currencies. Ron Temple, chief market strategist at Lazard, expressed a similar outlook, predicting that 2025 could mark the end of American exceptionalism in equity markets. He anticipates a continuous shift away from US investments, particularly in light of concerns related to inflation and debt levels.
Citrone echoed these sentiments, indicating that he believes the US market will consistently underperform against its global counterparts and that many investors will look to reallocate funds away from US assets. As the landscape continues to evolve, the implications of these trends may reshape investment strategies and global market dynamics in the years to come.
