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