The Rise of Non-U.S. Value Stocks: A New Haven for Global Investors
Investors shift towards non-U.S. 'value' stocks due to stretched U.S. valuations and fiscal strains. Withdrawing $152 billion from U.S. growth funds highlights this trend. Overseas 'value' and small-cap stocks are favored for their robust fundamentals and attractive valuations, amidst global monetary policies and fiscal stimuli.
Global investors are increasingly turning to non-U.S. 'value' stocks as American market valuations rise and fiscal pressures mount, making U.S. equities appear less appealing. In 2025, the first nine months saw a $152 billion withdrawal from U.S. growth funds, even as the S&P 500 reached record highs, reflecting total outflows for 2024.
Value stocks are attracting those seeking stability and income with their low valuations and dividend payouts, commonly found in mature sectors. Meanwhile, growth stocks like the 'Magnificent Seven' remain highly valued, with a focus on long-term capital gains over short-term stability.
MSCI data reveal a significant outperformance of value stocks in Europe, Australasia, and the Far East, with these indices reaching record levels. Despite strong performance by U.S. tech giants, experts suggest diversifying into international markets to hedge against U.S. concentration risks, driven partly by AI investments.
(With inputs from agencies.)
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