The pendulum always swings too far.


In 2007, the performance of the USA was well behind the Rest of the World over 1, 3, 5 7, & 10 years.

No advisor looking at this performance table would have steered any clients in the USA’s direction.

Unless they’d remembered performance tables are always history.

ETF assets at the time – $0.8trn.

Roll forward 7 years, throw in a European crisis & the USA was now on top over all periods.

Except by now, the ETF train was gaining momentum adding $400bn in 2014 alone.

So where do you think all this fresh ETF money started flowing?

Correct, the USA.

As ETF AUM tripled to $7.7trn over the next 6 years, all this buying pressure helped keep the USA at the top of the league tables.

Driving the mega-caps in these mkt cap-weighted ETFs in particular.

So today the top 5 ETFs globally are all USA based with ~46% weighting in tech (if you borrow Amazon & Tesla from Consumer Discretionary).

And these top 5 alone are worth $1.3trn, 50% more than the entire industry just a few years ago.

And roughly 70% growth.

Which doesn’t like an inflationary environment.

At a time when inflation is real – just ask any CEO.

The pendulum is swinging back fast to Value, don’t get caught.

Source: Bloomberg, MSCI

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