New research from the firm’s investment institute explores how the forces driving long dollar cycles also shape equity markets and help explain the extended periods of relative performance between the US and the rest of the world.
After years of capital and confidence flowing in one direction, signs of change are emerging across currencies, valuations and policy cycles, it said.
Analyst Dan Morgan said history shows that leadership between US and non-US equity markets has tended to shift over long periods.
“These cycles often move in step with broader dollar trends, reflecting the same underlying macro forces at work. The alignment is not exact, but it is consistent enough to suggest that changes in those forces can mark important turning points in global equity leadership,” he said.
Ninety One says that in recent years, these forces have combined to extend one of the longest periods of US equity outperformance on record.
“Strong capital inflows have reinforced the trend. By the end of 2024, international investors held US assets worth US$62 trillion, more than twice the size of the US economy. Much of this capital has been drawn to the powerful US technology sector, whose strength and profitability have defined market returns through the last cycle,” the firm said.
As a result, market performance has become increasingly dominated by a small group of leading companies. By June 2025, the largest 10 per cent of US-listed firms had an average market capitalization of US$240 billion - compared with just US$4.4 billion for the median company - marking the widest disparity in a century.
“Historically, periods of extreme concentration have tended to be followed by weaker returns. This pattern has played out repeatedly, from the Nifty Fifty era of the 1970s to the post-dotcom years, when market leadership diversified and returns became more broadly distributed,” Morgan said.
The forces shaping the next market cycle are set to look different, however. Advances in artificial intelligence, a revival in infrastructure spending, and the reordering of global supply chains could all help spread returns more widely.
Unlike the internet boom, when value clustered around a few dominant platforms, AI’s widespread adoption may drive productivity gains across many industries and regions.
The long stretch of US equity dominance has transformed global portfolios. Years of outperformance have pushed the US share of global stock benchmarks to nearly 70 per cent-far exceeding its underlying economic weight, estimated at closer to 40-50 per cent.
By comparison, developed markets outside the US contribute roughly 35-40 per cent of global revenues, earnings and dividends, while emerging markets account for the remaining 15-20 per cent.
“Relying on market-cap-weighted benchmarks is, in essence, anchoring to past returns, returns that have repeatedly proven unreliable guides to future outcomes. Despite its unmatched scale and liquidity, the nearly 70 per cent dominance of the US equity market within global benchmarks creates a distorted lens, undermining genuine geographic diversification,” the firm said.
In practice, regional equity allocations will adjust as benchmarks and market values realign, underscoring the importance of flexibility within long-term strategies. Restoring balance across regions could be key to capturing the next phase of global equity leadership.
“Regional performance cycles have remarkable staying power, but once clear evidence emerges that a cycle is shifting, investors can reposition portfolios for sustained new trends. Market-cap-weighted benchmarks anchor portfolios in the past, reflecting yesterday’s winners rather than tomorrow’s opportunities,” Morgan said.
