Latest news with #MSCIACWI
CNBC
16 hours ago
- Business
- CNBC
International stocks are ahead of the U.S. so far this year—how to add them to your portfolio
For investors, the U.S. has been the place to be in recent years. Over the past decade and a half, the S&P 500 — a measure of the broad U.S. stock market — has returned an annualized 14.2%. The MSCI ACWI ex-USA index, which measures the performance of stocks from pretty much everywhere else, logged a return of 6.5% over the same period. Since the start of 2025, however, investors are eschewing U.S. stocks in favor of international names. So far this year, the ACWI ex-USA index has returned 15.7%, trouncing the 1.5% return in the S&P. "In 2025 thus far, there are some clear indications that investors are adopting the 'ABUSA' ('Anywhere But the USA') mindset," says David Rosenstrock, a certified financial planner and director of financial planning and investments at Wharton Wealth Planning. "This shift is partly driven by concerns over market volatility in the U.S., uncertainty regarding policies and relatively weaker performance compared to global counterparts," he says. So is it time to invest in foreign stocks? Yes and no, say financial pros. You shouldn't make any wholesale changes to your portfolio mix based on short-term market results, they say. But if you have little or no foreign exposure, diversifying is likely a savvy move over the long term. Here's why. If you were born in the 90s, you may have never been invested during a sustained period during which foreign stocks outperformed domestic names, as they did in the back half of the 80s and much of the early 2000s. If that's the case, you may be tempted to continue ignoring foreign stocks, even after the recent uptick. "The problem is those trends tend to tend to reverse over time," says Amy Arnott, a portfolio strategist at Morningstar. "So even if the U.S. is outperforming over a very long period, like it did [in the 15 years] through 2024, eventually that trend reverses." While it may feel like the U.S. has dominated stock markets forever, it wasn't that long ago that foreign firms were delivering better returns. From 2001 to 2010, for instance, the ACWI ex-US index submitted a cumulative total return of 71.5% compared with a 15% gain in the S&P 500. Adding some foreign stocks to your portfolio can help guarantee at least some exposure to whichever side is performing better over the many years you're likely to invest. "True diversification means tapping into different economic cycles, monetary policies and growth drivers. It offers exposure to unique industries," says Marcos Segrera, a CFP and principal at Evensky & Katz/Foldes Wealth Management. "Furthermore, owning foreign stocks is a crucial way to diversify away from U.S.-specific risks." If you're looking to invest in foreign stocks, the most effective way to do it is by adding a low-cost index mutual fund or exchange-traded fund, says Arnott. "That way, you can get international diversification in one package and get exposure to a large number of companies and countries outside of the U.S.," she says. Market watchers generally divide foreign stocks into two camps: those that come from "developed" economies, such as those in Japan, Australia and several European countries, and emerging markets, such as China, India and much of Latin America. You can buy funds which invest in either, but "to keep things simple," owning a "total international stock" fund — such as one that tracks the MSCI ACWI ex-USA or something similar — will get you exposure to both, says Arnott. And while you may have powerful convictions about the future of a particular country and its economy, you'd be wise to avoid tilting your foreign exposure too much in that direction, Arnott says. Putting all your eggs in one country or region's basket, she says, can result in big swings in your portfolio. "It can be tempting to do that when there's a lot of excitement about Asia Pacific stocks or Latin America, or things like that," she says. "But it's difficult to use those types of funds in a portfolio just because they are more volatile, more narrowly defined, and people unfortunately have a tendency to sometimes see performance over the past few years and buy in at the wrong time."
Business Times
29-04-2025
- Business
- Business Times
‘Exodus' of US assets set to intensify, says strategist
GLOBAL investors are rotating out of US assets not because of uncertainty over tariffs, says strategist Marko Papic of BCA Research, but because non-US assets are more attractive, particularly as the US dollar is expected to weaken over time. Papic wrote in a recent note: 'The big picture is that the market narrative of US exceptionalism is dead. So, it doesn't really matter what happens with the trade war. President Trump has catalysed what was always going to happen, which is the rotation of capital away from extremely expensive US.' He maintains that the market story of 2025 is that 'global investors are using the catalyst and news flow of the trade war to lighten their exposure to US assets'. 'The trade war noise is providing cover for an absolute exodus out of the US.' This is evident in the year-to-date underperformance of Nasdaq and S&P 500 relative to the rest of the world. The Nasdaq is down by 10 per cent and S&P 500 by 6 per cent. In contrast, MSCI ACWI ex-US is up by more than 7 per cent; MSCI Europe by 3 per cent; China by more than 9 per cent; and Asia ex-Japan by 1 per cent. Papic is BCA Research chief strategist, whose analyses combine geopolitics and markets in a framework called GeoMacro. He was in Singapore last week for a conference by the Investment Management Association of Singapore, where he was on the podium to share his views on 'extracting geopolitical alpha'. He spoke to BT on the sidelines of the conference. US dollar, assets to weaken The US dollar is 'way too strong', he said, and could weaken by 30 to 50 per cent over the next five years. This would make US goods and services more attractive, and effectively rebalance trade for the US in a more 'gentlemanly' fashion than tariffs. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up 'Americans will be able to say – look, we're more attractive. Investment and factories will naturally move (to the US). Everything that Trump wants to do via threats and aggression will happen in a gentlemanly way, because currency depreciation is an across-the-board gentleman's tariff. The reason that rivals and partners are not going to be mad is because it's not permanent. Currencies go up and down.' He expects the value of US assets to deflate over the next five years. 'This doesn't mean the S&P 500 doesn't end the year positive; it may go up 7 or 10 per cent. But if the dollar declines by 7 per cent, in currency-adjusted returns, someone in Japan, Singapore or Europe would do better in other equity markets. 'Most investors, whether they're individuals or family offices or long-term pension funds, are up to their necks in US assets and US dollars… If you take some of the proceeds over the last five to 10 years and invest in foreign assets in a very diversified way, that will be the smartest thing to do over the next five years.' Singapore's future role Singapore, he observed, is feeling 'a lot of consternation' with the onslaught of tariffs and the trade war. But that consternation, he argued, is 'built on two false narratives'. The first narrative is the belief that globalisation is ending. This, he argued, is not so. 'Exports as a percentage of global GDP have been stable at 30 per cent for the past seven years. That's not going away. Trump's actions are causing other countries to start redoubling on globalisation. Singapore will be fine.' The second is that Singapore has traditionally played the role of helping to 'grease the wheels of US-China cooperation'. But Singapore, he said, should position itself as the 'financial capital of a multi-polar world'. 'That's where Singapore's long-term relationship with the US could be a detriment. Singapore may have to take a stand, or take no stand.' He believes the future lies in facilitating capital in a 'non-aligned Global South', and 'whoever gets there faster wins'. He sees other financial centres competing for leadership in this, including India, Abu Dhabi and Hong Kong. The Global South refers to countries mainly in Asia, Africa and Latin America. 'The next 30 years are going to be about South to South… not so much goods but capital flows and savings. I think that's where Singapore's future is.' In his GeoMacro reports, Papic has written on what he sees as an exodus out of US assets, as well as over-valuation and false narratives by Big Tech companies. One of the drivers of the funds outflow is the realisation that the 'fiscal gravy train' is slowing. Until recently the US stock market, especially tech stocks, has been buoyed by expectations of a generous fiscal package under Trump. But Trump, he wrote, will increasingly face the 'tightening noose of material constraints'. One constraint is the US bond market, which has not rallied as much given the rising odds of a recession. If bond yields remain elevated, then Trump may not be able to follow through with expected tax cuts, as fiscal spending may be opposed by conservatives in the House. 'The material constraints against Trump are coming fast and hard. Bond yields are too high, fiscal conservatives in the House are revolting and negotiating trade with the entire world at the same time seems folly.'
Business Times
29-04-2025
- Business
- Business Times
'Exodus' out of US assets set to intensify, says strategist
GLOBAL investors are rotating out of US assets not because of uncertainty over tariffs, says strategist Marko Papic of BCA Research, but because non-US assets are more attractive, particularly as the US dollar is expected to weaken over time. Papic wrote in a recent note: 'The big picture is that the market narrative of US exceptionalism is dead. So, it doesn't really matter what happens with the trade war. President Trump has catalysed what was always going to happen, which is the rotation of capital away from extremely expensive US.' He maintains that the market story of 2025 is that 'global investors are using the catalyst and news flow of the trade war to lighten their exposure to US assets'. 'The trade war noise is providing cover for an absolute exodus out of the US.' This is evident in the year-to-date underperformance of Nasdaq and S&P 500 relative to the rest of the world. The Nasdaq is down by 10 per cent and S&P 500 by 6 per cent. In contrast, MSCI ACWI ex-US is up by more than 7 per cent; MSCI Europe by 3 per cent; China by more than 9 per cent; and Asia ex-Japan by 1 per cent. Papic is BCA Research chief strategist, whose analyses combine geopolitics and markets in a framework called GeoMacro. He was in Singapore last week for a conference by the Investment Management Association of Singapore, where he was on the podium to share his views on 'extracting geopolitical alpha'. He spoke to BT on the sidelines of the conference. US dollar, assets to weaken The US dollar is 'way too strong', he said, and could weaken by 30 to 50 per cent over the next five years. This would make US goods and services more attractive, and effectively rebalance trade for the US in a more 'gentlemanly' fashion than tariffs. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up 'Americans will be able to say – look, we're more attractive. Investment and factories will naturally move (to the US). Everything that Trump wants to do via threats and aggression will happen in a gentlemanly way, because currency depreciation is an across-the-board gentleman's tariff. The reason that rivals and partners are not going to be mad is because it's not permanent. Currencies go up and down.' He expects the value of US assets to deflate over the next five years. 'This doesn't mean the S&P 500 doesn't end the year positive; it may go up 7 or 10 per cent. But if the dollar declines by 7 per cent, in currency-adjusted returns, someone in Japan, Singapore or Europe would do better in other equity markets. 'Most investors, whether they're individuals or family offices or long-term pension funds, are up to their necks in US assets and US dollars… If you take some of the proceeds over the last five to 10 years and invest in foreign assets in a very diversified way, that will be the smartest thing to do over the next five years.' Singapore's future role Singapore, he observed, is feeling 'a lot of consternation' with the onslaught of tariffs and the trade war. But that consternation, he argued, is 'built on two false narratives'. The first narrative is the belief that globalisation is ending. This, he argued, is not so. 'Exports as a percentage of global GDP have been stable at 30 per cent for the past seven years. That's not going away. Trump's actions are causing other countries to start redoubling on globalisation. Singapore will be fine.' The second is that Singapore has traditionally played the role of helping to 'grease the wheels of US-China cooperation'. But Singapore, he said, should position itself as the 'financial capital of a multi-polar world'. 'That's where Singapore's long-term relationship with the US could be a detriment. Singapore may have to take a stand, or take no stand.' He believes the future lies in facilitating capital in a 'non-aligned Global South', and 'whoever gets there faster wins'. He sees other financial centres competing for leadership in this, including India, Abu Dhabi and Hong Kong. The Global South refers to countries mainly in Asia, Africa and Latin America. 'The next 30 years are going to be about South to South… not so much goods but capital flows and savings. I think that's where Singapore's future is.' In his GeoMacro reports, Papic has written on what he sees as an exodus out of US assets, as well as over-valuation and false narratives by Big Tech companies. One of the drivers of the funds outflow is the realisation that the 'fiscal gravy train' is slowing. Until recently the US stock market, especially tech stocks, has been buoyed by expectations of a generous fiscal package under Trump. But Trump, he wrote, will increasingly face the 'tightening noose of material constraints'. One constraint is the US bond market, which has not rallied as much given the rising odds of a recession. If bond yields remain elevated, then Trump may not be able to follow through with expected tax cuts, as fiscal spending may be opposed by conservatives in the House. 'The material constraints against Trump are coming fast and hard. Bond yields are too high, fiscal conservatives in the House are revolting and negotiating trade with the entire world at the same time seems folly.'
Forbes
28-04-2025
- Business
- Forbes
How Retirement Investment Strategy Impacts Retirement Spending
When it comes to retirement planning, most people know they need to save, but few understand how certain retirement investment strategies can impact the amount of income they'll actually have. In this article, we'll explore four different retirement investment strategies and how each affects your ability to replace 70% of your pre-retirement income: The MSCI ACWI (All Country World Index ) captures large and mid-cap representation across 23 Developed Markets (DM) and 24 Emerging Markets (EM) countries. With 2,558 constituents, the index covers approximately 85% of the global investable equity opportunity set. For a complete description of the index methodology, please see Index methodology. For investment purposes, I use the iShares MSCI ACWI ETF which seeks to track the investment results. The S&P U.S. Aggregate Bond Index is designed to measure the performance of publicly issued U.S. dollar denominated investment-grade debt. The index is part of the S&P Aggregate™ Bond Index family and includes U.S. treasuries, quasi-governments, corporates, taxable municipal bonds, foreign agency, supranational, federal agency, and non-U.S. debentures, covered bonds, and residential mortgage pass-throughs. It has 15,071 constituents. For investment purposes, I use the iShares Core U.S. Aggregate Bond ETF which seeks to track it. Here's the sample case we'll follow: We'll also assume the client will qualify for Social Security benefits, which adjust with inflation. With salary increasing 2.5% per year: Annual retirement contributions: Total future contributions: about $537,000 in future dollars. Using the Social Security Benefits Estimator, this worker could expect about $40,000–$45,000/year starting at full retirement age. Target annual retirement income: 70% of $184,475 = $129,133 (before taxes). Income Sources: Based on these assumed, but not guaranteed, average returns: Here's what each retirement investment mix could grow to by retirement: Retirement investment portfolio mixes Envision Wealth Planning Inc. Note: In the new transition strategy,100% ACWI Pre/60/40 Post, the account grows 100% ACWI until retirement, then rebalances into 60/40 for safer withdrawals. Using a 4% withdrawal* (source: Investopedia): Portfolio strategy and resulting income Envision Wealth Planning Inc. *Note: I am not advocating for 4% withdrawal. It is used here to illustrate the results with that assumption. I advocate working with a designated professional familiar with withdrawal strategies to personalize. Shortfall vs. Goal ($129,133): The 100% ACWI pre-retirement / 60/40 post-retirement approach offers: This helps balance growth and safety, reducing the risk of running out of money later in life. In my Forbes article on maximizing Roth strategies, I discuss similar risk management ideas for building tax-smart, diversified retirement income streams. Even the most aggressive strategy leaves a shortfall. Here's how to fix it: 1. Save More Each Year Boost contributions percentage each year. 2. Delay Retirement Waiting until 70 raises Social Security by about 8% annually. 3. Add Roth Accounts Tax-free income from Roth IRAs and Roth 401(k)s can ease the burden. My article on Roth conversions explains how smart tax moves today can lower taxes later. 4. Adjust Lifestyle Expectations Planning for a 5-10% lower spending target could make a huge difference in retirement security. Retirement investment strategy is a key component of creating future retirement income. Planning for retirement isn't just about picking a number. It's about building a living, breathing strategy that adapts to life's changes. Working with a designated and fiduciary financial planner, such as a Certified Financial Planner, can help you build a personalized plan that keeps growing while protecting what you've worked so hard to build. By using smart retirement investment choices, increasing savings, and planning taxes wisely, you can make sure your retirement isn't just comfortable — it's secure.
Yahoo
03-04-2025
- Business
- Yahoo
S&P 500 posts worst quarter since 2009 ahead of Liberation Day
The S&P 500 index underperformed global stocks by 9.6% during the first quarter of 2025, marking the worst quarterly margin since 2009. The Kobeissi Letter, a popular analyst of the global markets, highlighted on X (formerly Twitter) on Apr. 1 that the last quarter was a tough one for the U.S. stocks. Though the MSCI All Country World Index (MSCI ACWI) excluding the US soared 5.0% in the last quarter, the S&P 500 fell 4.6%. In contrast, the S&P 500 outperformed global stocks by a massive 10% in Q4 2024. The MSCI ACWI is a stock market index that measures the performance of large and mid-cap companies across 23 developed and 26 emerging market countries. Note that the U.S. economic policy uncertainty index is also rising. The analyst highlighted how the S&P 500 rallied 63% and 50% over a year following the 2020 and 2009 uncertainty surges. In contrast, the index fell 17% and 9% over a year following the 2001 and 2008 uncertainty surges. How the index will perform over the next few months remains to be seen. President Donald Trump's tariff war, a new phase of which begins on Apr. 2 that is dubbed the Liberation Day, has led to anxiety around inflation in the market. The 2-year breakeven inflation rate has jumped the highest since the March 2023 banking crisis to 3.27%, the analyst warned. The 2-year breakeven inflation rate is a measure of the expected inflation rate over the next two years. It means the market expects the inflation rate to exceed 3% over the next 2 years. The Kobeissi Letter has already warned of a 'hot' inflation during the upcoming quarter.
