US exceptionalism has shaped portfolios as much as it has shaped market expectations. After more than a decade of US leadership, our starting point is to question whether the conditions behind past market leadership still hold.
We think a more revealing question is what made the previous decade so unusual. The years following the Global Financial Crisis combined exceptionally low interest rates, a strengthening dollar and powerful growth in a narrow group of US businesses. As those conditions change, we see a global opportunity set that deserves a fresh look. Do portfolios built around yesterday’s winners fully reflect where tomorrow’s earnings and returns may come from?
When market size outpaces fundamentals
The success of leading US companies is undeniable. Yet the scale of US market dominance tells us more than the strength of those businesses alone.
Over three decades, the US share of global GDP and listed company earnings has changed relatively little. Its share of global equity market capitalisation, however, has risen substantially since the financial crisis. Share prices have become more exceptional than the underlying economic proportions.
One comparison brings that concentration into focus: at mid-2026, the Magnificent Seven’s combined market capitalisation exceeded the value of the entire MSCI US Index in 2016.
For us, this raises a portfolio question. How much future return depends on a small group of companies continuing to meet increasingly demanding expectations? And what opportunities might be overlooked elsewhere?
Growth has a wider address
Technology remains an important source of earnings growth. But it is far from the only one.
We see earnings strengthening across sectors outside the US, creating opportunities in businesses that receive less attention than the dominant market leaders. A more normal cost of capital is helping reshape that landscape.
Positive interest rates have improved lending economics for financial companies in many international markets. Healthier financial sectors can support businesses seeking capital to expand. Recovering labour markets and continued growth in global trade also challenge the assumption that international companies’ fortunes revolve around US demand.
These changes make the research question more interesting. Which businesses can turn improving conditions into durable earnings? Which have the competitive strengths to sustain them? And how much of that potential is already reflected in the price?
A strong business still needs the right price
An attractive growth story can become a demanding investment when expectations run ahead of fundamentals.
Our historical analysis shows that higher starting valuations for US equities have been associated with a less favourable range of subsequent five-year returns. Valuation cannot tell us when leadership will change, but it helps us judge what must go right to justify the price.
Currency matters too. Dollar strength supported US assets’ relative performance during much of the previous decade. A stabilising or weakening dollar could ease a longstanding headwind for international equities held by dollar-based investors.
Higher dividend yields outside the US offer another potential contribution to total return. We examine the cash flows supporting those payments, rather than treating yield alone as evidence of value.
Bring the opportunity into the portfolio
Our global generalist research model brings a broader perspective to security selection. We compare businesses across sectors and countries, challenging assumptions and weighing quality, valuation and portfolio contribution together. Every potential holding must compete for capital against the team’s strongest ideas.
That discipline takes distinct forms across three UCITS strategies. Equity Income Builder seeks companies with durable cash flows and the ability to sustain and grow dividends. Global Opportunities builds a concentrated, high-conviction portfolio unconstrained by benchmark weights. International Equity applies our Three-Basket framework to opportunities outside the US.
Each strategy offers a distinct way to put that broader perspective to work. Our generalist approach keeps us open to opportunities wherever they emerge—including in the US—with conviction grounded in research and valuation rather than past market leadership.
Opinion column written by Josh Rubin, Client Portfolio Manager at Thornburg
This material is for investment professionals and institutional investors only.
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