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This website has been carefully prepared by Robeco. The information contained in this publication is based upon sources of information believed to be reliable. Robeco is not answerable for the accuracy or completeness of the facts, opinions, expectations and results referred to therein. Whilst every care has been taken in the preparation of this website, we do not accept any responsibility for damage of any kind resulting from incorrect or incomplete information. This website is subject to change without notice. The value of the investments may fluctuate. Past performance is no guarantee of future results. If the currency in which the past performance is displayed differs from the currency of the country in which you reside, then you should be aware that due to exchange rate fluctuations the performance shown may increase or decrease if converted into your local currency. For investment professional use only. Not for use by the general public.

I Disagree

05-09-2025 · Insight

Targeting alpha in a global trade revolution

The trade war started by the new US government has prompted a severe stock market sell-off as economic confidence recedes amid uncertainty over the re-organization of complex global supply chains. This paradigm shift in trading conditions requires a more balanced global equity allocation to both developed and emerging markets.

    Authors

  • Kees Verbaas - Global Head of Fundamental Equity

    Kees Verbaas

    Global Head of Fundamental Equity

Summary

  1. US exceptionalism is in question, even if Trump’s trade war is contained

  2. Long-term alpha generation will demand a more global footprint

  3. Rebalancing away from US assets and USD weakness will bolster EM

Rebalancing away from the US will accelerate

‘Liberation day’ on 2 April has had two impacts which will be enduring. First, US exceptionalism took a serious blow, with the imposition of sweeping global tariffs certain to drive US inflation, weaken the US economy and make it more difficult for leading US multinationals to operate globally. Second, the impact on the global economy ex-US will be deflationary, with lower demand and overcapacity in some sectors likely to manifest itself rapidly, with negative short-to-medium-term macroeconomic aftershocks.

At the time of President Trump’s inauguration, US equity market dominance had reached its zenith with the US accounting for 64% of the MSCI All World Index while the country accounts for 15.5% of global GDP in 2024.1

Figure 1: MSCI World is dominated by US companies

Figure 1: MSCI World is dominated by US companies

Source: MSCI. The MSCI ACWI captures large- and mid-cap representation across 23 developed markets (DM) and 24 emerging markets (EM) countries. With 2,558 constituents, the index covers approximately 85% of the global investable equity opportunity set.

Emerging Stars Equities D EUR

performance ytd (02/28)
4.67%
Performance 3y (02/28)
3.58%
since inception (02/28)
5.93%
total size of fund (02/28)
2231mln
morningstar (02/28)
View the fund
Past performance is no guarantee of future results. The value of the investments may fluctuate. Annualized (for periods longer than one year). Performances are net of fees and based on transaction prices.

Valuations also reflected this dominance, with the US CAPE ratio on 31 March 2025 at 32.8, compared to an average of 19 for developed markets (DM) and an average of 14 for emerging markets (EM).2 This US valuation premium seems certain to narrow as the US rewrites the rules of global competition.T

Read the complete insight and get our analysis of where to invest in this new global trading landscape.

Download the full paper


Footnotes

1Source: Statista based on a Purchasing Power Parity measure of estimated 2024 GDP.
21Q25 Global Valuations – The Idea Farm - 8 April 2025. The CAPE ratio (cyclically adjusted price-to-earnings ratio), assesses whether the market is overvalued or undervalued by comparing current prices to average earnings over a 10-year period, adjusted for inflation.

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Important information
The Robeco Capital Growth Funds have not been registered under the United States Investment Company Act of 1940, as amended, nor or the United States Securities Act of 1933, as amended. None of the shares may be offered or sold, directly or indirectly in the United States or to any U.S. Person (within the meaning of Regulation S promulgated under the Securities Act of 1933, as amended (the “Securities Act”)). Furthermore, Robeco Institutional Asset Management B.V. (Robeco) does not provide investment advisory services, or hold itself out as providing investment advisory services, in the United States or to any U.S. Person (within the meaning of Regulation S promulgated under the Securities Act).
This website is intended for use only by non-U.S. Persons outside of the United States (within the meaning of Regulation S promulgated under the Securities Act who are professional investors, or professional fiduciaries representing such non-U.S. Person investors. By clicking “I Agree” on our website disclaimer and accessing the information on this website, including any subdomain thereof, you are certifying and agreeing to the following: (i) you have read, understood and agree to this disclaimer, (ii) you have informed yourself of any applicable legal restrictions and represent that by accessing the information contained on this website, you are not in violation of, and will not be causing Robeco or any of its affiliated entities or issuers to violate, any applicable laws and, as a result, you are legally authorized to access such information on behalf of yourself and any underlying investment advisory client, (iii) you understand and acknowledge that certain information presented herein relates to securities that have not been registered under the Securities Act, and may be offered or sold only outside the United States and only to, or for the account or benefit of, non-U.S. Persons (within the meaning of Regulation S under the Securities Act), (iv) you are, or are a discretionary investment adviser representing, a non-U.S. Person (within the meaning of Regulation S under the Securities Act) located outside of the United States and (v) you are, or are a discretionary investment adviser representing, a professional non-retail investor.


Access to this website has been limited so that it shall not constitute directed selling efforts (as defined in Regulation S under the Securities Act) in the United States and so that it shall not be deemed to constitute Robeco holding itself out generally to the public in the U.S. as an investment adviser. Nothing contained herein constitutes an offer to sell securities or solicitation of an offer to purchase any securities in any jurisdiction. We reserve the right to deny access to any visitor, including, but not limited to, those visitors with IP addresses residing in the United States. This website has been carefully prepared by Robeco. The information contained in this publication is based upon sources of information believed to be reliable. Robeco is not answerable for the accuracy or completeness of the facts, opinions, expectations and results referred to therein. Whilst every care has been taken in the preparation of this website, we do not accept any responsibility for damage of any kind resulting from incorrect or incomplete information. This website is subject to change without notice. The value of the investments may fluctuate. Past performance is no guarantee of future results. If the currency in which the past performance is displayed differs from the currency of the country in which you reside, then you should be aware that due to exchange rate fluctuations the performance shown may increase or decrease if converted into your local currency. For investment professional use only. Not for use by the general public.