Skip to content
All about finance. — Investment trusts — Personal-finance — Finance — Investing — Bonds — Business — Tariffs

Contemplating transferring funds from America?

Increasing scrutiny and criticism target America's self-perceived uniqueness and economic superiority over other countries, a perspective often referred to as US exceptionalism.

,   and  Administrator
3 min read
Criticism mounts against the notion of American exceptionalism, the belief that the U.S. and its...
Criticism mounts against the notion of American exceptionalism, the belief that the U.S. and its economy stand above and exceed those of other countries, facing growing scrutiny.

Contemplating transferring funds from America?

Unraveling the myth of US exceptionalism in global investing is becoming a hot topic these days. After dominating the scene for so long, could the US stock market finally be losing its edge?

A recent look at fund flow data from the Investment Association unveiled that instead of pouring £817 million into UK equity funds, retail investors chose to sink £948 million into North American-focused equity funds during April. Despite the tariff drama negatively impacting the value of US equities, investors apparently saw this dip as a golden opportunity to take on more risk, buying stocks at lower prices[1].

One might question if this diligent move will pay off in the long run. After all, the US has had an iron grip on global investing for decades, but is that unshakable dominance finally coming to an end?

The US economy may be the biggest in the world, but it's important to remember that its companies are already highly overvalued compared to their share of global GDP[1]. In fact, US equities are nearly twice as pricey as they should be, while global trackers like the MSCI World Index are currently weighted 71.4% towards the US, heavily skewing the global stock market[1].

If the events of 2025 have shown us anything, it's that the concept of US exceptionalism might indeed be crumbling. As the S&P 500 plummeted during April due to tariff turbulence, European markets surged, with the DAX hitting several new all-time highs in May[1].

Expert opinion is divided when it comes to the demise of US exceptionalism. While some believe that it's too early to call it quits, there are definite signs that investors are keen on diversifying their portfolios[1].

So, what exactly is US exceptionalism? In short, it refers to the prevailing belief that the US stands out (in a good way) from other countries, owing to an ingrained superiority[3]. This view is fuelled by enduring American ideals such as the "American dream" and the notion that US citizens possess exceptional work ethics, productivity, and competitive institutions[3].

This simplistic, yet ingrained doctrine has led to some peculiar behavior in the financial markets. US stocks often trade at nearly twice the price as their international counterparts, highlighting the overconfidence and optimism investors may have towards American companies[3].

As the US grapples with challenges to its stock market throughout this year, some are now asking whether the end of US exceptionalism is truly at hand. "The US market's performance over much of the first five months of the year has been far from exceptional," said William Marshall, chief investment officer at Hymans Robertson Investment Services[3].

The emergence of technological advancements like DeepSeek and geopolitical events such as Donald Trump's tariff regime have all contributed to the argument that US exceptionalism may be waning. It is worth noting, however, that US exceptionalism might just be taking a temporary pause rather than a permanent leap[3].

For those who decide to take a stance against the supposedly ending era of US exceptionalism, there are several ways to safeguard their portfolios. Understanding investment fundamentals, such as the volatility of equities and the importance of global diversification, can help investors navigate the changing landscape[1].

Some experts recommend looking into the potential undervaluation of markets like the UK and Japan, both of which offer attractive stocks and relatively low currency valuations[3].

Despite the challenges facing the US market, global investors at heart, such as Hymans Robertson, still see value in holding US assets. Alternatively, European investment trusts might benefit from the impending economic upturn on the continent[3].

Whatever the final outcome may be, the global investing landscape is certainly shifting, and it's crucial for investors to be aware of and adapt to these changes.

  1. Investors preferring North American-focused equity funds over UK equity funds indicates a shift in global investing, potentially challenging the US's dominant position.
  2. US equities being overvalued compared to global GDP and being nearly twice as pricey as international counterparts suggests an overconfidence in American companies.
  3. The significant surge of European markets while the S&P 500 plummeted due to tariff turbulence supports the argument of US exceptionalism's decline.
  4. To safeguard portfolios from the changes in the global investing landscape, investors are encouraged to consider opportunities in undervalued markets like the UK and Japan, or explore European investment trusts.

Read also:

    Related

    Latest