As the closer of 2025 approaches, a notable trend is emerging among investors: a growing reluctance to fully commit to American assets. This trend began in April when President Trump’s declaration of “Liberation Day” triggered significant market turbulence, leading to a sell-off of American stocks, bonds, and the U.S. dollar. This phenomenon has been characterized as “Sell America” or, in some circles, “ABUSA,” which stands for “Anywhere But the USA.”
The months that followed also saw the rise of the “TACO” trade, referring to the notion that Trump frequently reverses his policies. Many market observers note that individual investors are increasingly expressing a desire to diversify their holdings beyond the United States. Dave Nadig from ETF.com recently highlighted this sentiment, stating, “The average investor has far too much of their money sitting in the United States.”
Despite record highs achieved by major Wall Street averages after initial market panic induced by tariffs, there remains a keen interest among international investors for portfolios that do not predominantly feature U.S. equities. Daniel Coatsworth, head of markets at AJ Bell, pointed out a significant increase in demand for global funds that intentionally exclude American assets. He explained that many private investors are now exploring options to invest in global funds that still provide broad geographical exposure while deliberately omitting the U.S.
In fact, various global market benchmarks have shown that international stocks have outperformed U.S. markets this year. The MSCI World ex USA Index, which covers large- and mid-cap companies across 22 developed markets outside the U.S., has recorded a remarkable 24% gain since January, in contrast to the S&P 500’s 15.6% increase.
Coatsworth identified two primary factors contributing to this trend: the overwhelming presence of U.S. equities in global portfolios and dissatisfaction with the political climate in the U.S. Many investors feel they have sufficient exposure to American markets and are hesitant to increase it further. Moreover, concerns about U.S. governance have led some to reconsider their asset allocations.
Despite the fluctuating political and economic landscape in the U.S., investor skepticism persists regarding the valuations of American equities. Christoph Schon, an investment decision research lead at Danish firm SimCorp, noted concerns about the heavy concentration within the American stock market. He pointed to the “Magnificent 7” stocks—Apple, Amazon, Alphabet, Meta, Microsoft, Nvidia, and Tesla—that constitute nearly a third of the S&P 500’s market capitalization, highlighting their focus on cyclical sectors such as technology and consumer discretionary, compared to a more diversified group of top stocks in Europe.
Louis Lau, director of investments at Brandes Investment Partners, has observed a surge in demand for international assets this year, noting substantial inflows into international and small-cap strategies that exclude U.S. assets. Investors are still engaging with U.S. equities but are leaning toward value investments or seeking more diversified global portfolios.
Not all industry professionals share the view of a mass exodus from American investments. Amol Dhargalkar of Chatham Financial described his observations as reflecting a “Hedge America” mentality rather than a wholesale sell-off. He noted that U.S. policy changes have introduced some selling pressure on the dollar but don’t necessarily indicate a major trend away from American assets.
Nick Niziolek from Calamos Investments commented that, in his view, interest in U.S.-excluded asset classes peaked after the April market downturn, leading to some rebalancing. However, he emphasized that many investors have since regained comfort in their allocations to U.S. assets as markets recovered.
Niziolek highlighted a notable divergence between U.S. and international investors. A European investor who placed money in the S&P 500 this year would have seen only a 2% net return due to the euro’s appreciation, while the MSCI Europe Index offered a 14% return in local currency, prompting many overseas investors to reconsider incremental investments in their local markets. This shift underscores a significant re-evaluation of asset allocation amid changing economic and geopolitical conditions.
