Asset Classes Explained: Global Equity Pera On The Issues

Equities is often cited in institutional research as a starting point for global diversification. How much of a portfolio is typically invested outside the U.S.? In times of uncertainty, that kind of balance can help portfolios stay on track.

• It should not be assumed that investment in the securities identified has been or will be profitable.
• Sharpen your knowledge with the latest wealth engagement news, market commentary and planning education.
• Past performance is no guarantee of future results.
• It’s important to consider tax and investment implications of holding or exercising your options.
• These regional allocations may be historically correlated over the long term, but they can experience wildly different returns in discrete periods.
• Use of this site is confirmation that you are an Investment Professional able to invest for investors in the European Union.

Key Factor Supporting International Value: Earnings Growth

Use of this site is confirmation that you are an Investment Professional able to invest for investors in the United Kingdom. No further distribution or dissemination of the MSCI data is permitted without MSCI’s express written consent. Without limiting any of the foregoing, in no event shall MSCI, any of its affiliates or any third party involved in or related to compiling, computing or creating the data have any liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if notified of the possibility of such damages. Investment vehicles may not be available to all investors and are subject to eligibility.

Msci Eafe Net Total Return Versus S&p 500 Total Return

Historical MSCI data and analysis should not be taken as an indication or guarantee of any future performance analysis, forecast or prediction. Realizing these growth projections would provide a notable performance catalyst given the low level of starting valuations. Index performance is for illustrative purposes only and is not indicative of any specific investment. During more positive rate environments in which the ECB policy rate was greater than 0.50%, the forward one‑year excess return for value versus growth was an impressive 4.40%. Interest rate policy from the European Central Bank (ECB) is another dynamic that may favor international value versus growth.

About The Team

Past performance is not indicative of future results. Isolating an example of the S&P 500® Index relative to the MSCI EAFE Index, let’s consider the quarterly performance differential over the past 20 years, with events in the 95th percentile highlighted in green. This reshaping of global trade policy may affect individual economies unevenly.

Portfolio

The information on this website does not constitute an offer to sell, or a solicitation of an offer to purchase, securities in any jurisdiction to any person to whom it is not lawful to make such an offer. Certain solutions discussed in these materials will be subject to minimum investment amounts and other restrictions that apply. You also confirm that you are a qualified institutional investor or a consultant to qualified institutional investors and wish to proceed.

Eileen Riley, Cfa

From 2020 to 2024, these stocks experienced average annual swings that were twice as large as those of the broader index. For more than a decade, U.S. stocks have led the way. Equities by examining valuation shifts, volatility patterns and long‑term return potential. Sharpen your knowledge with the latest wealth engagement news, market commentary and planning education. While the Portfolio is “no load”, management fees and expenses will apply. Portfolio holdings are subject to review and adjustment in accordance with the Portfolio’s investment strategy and may vary in the future, and should not be considered recommendations to buy or sell any security.

• Equities is often cited in institutional research as a starting point for global diversification.
• Historically, the U.S. has outpaced global peers thanks to faster economic growth, more profitable companies and higher investor confidence.
• The model cannot account for the impact that economic, market, and other factors may have on the implementation and ongoing management of an actual investment portfolio.
• It is a commonly used benchmark for institutional investors like PERA and is designed to capture 99 percent of the global equity market.

The Equities team achieves its diversified investment portfolio by using a combination of active and passive management strategies. By relying on internal equity asset management, PERA saves tens of millions of dollars in external manager fees every year. Broadly defensive positioning had successfully mitigated downside risk but contributed toward negative relative returns. Over time, global investing has improved diversification for disciplined investors, and we believe allocations should be maintained despite recent underperformance and the troubling outlook. Global equities currently have a negative annual return, which history says could be a precursor to outperformance in the next five years.

• This material is provided for general informational purposes only and is not intended to provide legal, tax, or investment advice.
• Is now a good time to add international equities?
• While the Portfolio is “no load”, management fees and expenses will apply.
• Net returns are gross returns less effective management fees.

Over the last three years, relative earnings growth has changed hands and favored growth equities—another argument for a broadly diversified portfolio exposure. We analyzed rolling three‑year returns and the relative performance of the MSCI EAFE Value Index and the MSCI EAFE Growth Index since January 2000. Diversifying equity exposures across size, style, and geography seeks to enhance performance consistency, which, in turn, could help to lower portfolio volatility. The Equities team utilizes all the tools at its disposal to form a low-cost and well-diversified portfolio of stocks that outperforms the benchmark Everestex trading platform on a risk-adjusted basis over long time periods.