Ex-US Equities Index Up 8% Year-to-Date vs US Stocks' 1% Drop
ACWX ex-US equities index has gained 8% year-to-date versus a 1% decline for the S&P 500, marking the worst US-versus-global start since 1995. Over the past 12 months, ACWX has risen 30% compared with a 10% advance in US large caps.
1. Strong Ex-US Performance
ACWX’s ex-US index has outperformed US equities with an 8% gain since January while the S&P 500 slipped 1%, marking the weakest US-versus-global start since 1995. This trend extends over 12 months, where ACWX rose 30% against a 10% rise in US large-cap stocks.
2. Growing Valuation Gap
US price-to-earnings ratios now average 40% higher than those of ex-US markets, and the US market trades above 20x earnings even when excluding the largest technology names. This widening premium stems from a decade-long Big Tech valuation surge that may be difficult to sustain.
3. US Market Concentration Risks
The ten largest US companies account for 40% of the S&P 500, up from roughly 20% a decade ago, heightening vulnerability if tech sector expectations falter. Meanwhile, geopolitical tensions and US dollar repricing have shifted investor focus toward non-US markets.