The US bull market has well and truly come to a close, and investors should start shifting their focus to other markets, says Tempo Asset Management.
Speaking in Sydney, Tempo AM principal Joe Bracken said for the last five years the US has “massively outperformed everybody else” but a number of European and Asian markets are now beginning to look “relatively more attractive”.
“Annual US returns have been nearly 10 per cent higher than the average non-US market over the past five years and that has almost single-handedly driven the excellent international returns enjoyed by Australian investors,” Mr Bracken said.
“The US market has benefitted from being the least ugly duckling among the major equity markets. But a number of European and Asian markets are now beginning to look relatively more attractive.
“It’s clear that the European Central Bank is committed to quantitative easing and European interest rates are low and going nowhere fast, which will support corporate growth,” he said.
Mr Bracken also added the US is expected to “underdeliver” in relative performance terms over the next five years, which would be a “drag” on returns from the US-dominated MSCI World benchmark.
“With US returns set to decline, investors who want to continue to capture good international returns, need to consider other ways of investing in international portfolios that do not have such an outsized bet on US market performance,” Mr Bracken said.
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