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Decline
Targeting alpha in a global trade revolution

09-05-2025 · 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

Top keywords

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.

Global Stars Equities D EUR

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performance ytd (30/04)
-12.46%
Performance 3y (30/04)
6.97%
since inception (30/04)
11.22%
total size of fund (30/04)
1989mln
morningstar (30/04)
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 This disclaimer applies to any documents and the verbal or written comments of any person in presentations or webinars on this website and taken together is referred to herein as the “Information”. The services to which the Information relate are NOT FOR RETAIL CLIENTS - The information contained in the Website is solely intended for professional investors, defined as investors which (1) qualify as professional clients within the meaning of the Markets in Financial Instruments Directive (MiFID), (2) have requested to be treated as professional clients within the meaning of the MiFID or (3) are authorized to receive such information under any other applicable laws and must not be relied or acted upon by any other persons. This Information does not constitute an offer to sell, or a solicitation of an offer to buy, any financial product, and may not be relied upon in connection with the purchase or sale of any financial product. You are cautioned against using this Information as the basis for making a decision to purchase any financial product. To the extent that you rely on the Information in connection with any investment decision, you do so at your own risk. The Information does not purport to be complete on any topic addressed. The Information may contain data or analysis prepared by third parties and no representation or warranty about the accuracy of such data or analysis is provided.
In all cases where historical performance is presented, please note that past performance is not a reliable indicator of future results and should not be relied upon as the basis for making an investment decision. Investors may not get back the amount originally invested. Neither Robeco Institutional Asset Management B.V. nor any of its affiliates guarantees the performance or the future returns of any investments. 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. Robeco Institutional Asset Management B.V. (“Robeco”) expressly prohibits any redistribution of the Information without the prior written consent of Robeco. The Information is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use is contrary to law, rule or regulation. Certain information contained in the Information includes calculations or figures that have been prepared internally and have not been audited or verified by a third party. Use of different methods for preparing, calculating or presenting information may lead to different results. Robeco Institutional Asset Management UK Limited (“RIAM UK”) is authorised and regulated by the Financial Conduct Authority. RIAM UK, 30 Fenchurch Street, Part Level 8, London EC3M 3BD (FCA Reference No:1007814). The company is registered in England and Wales under Ref No. 15362605.

In all cases where historical performance is presented, please note that past performance is not a reliable indicator of future results and should not be relied upon as the basis for making an investment decision. Investors may not get back the amount originally invested. Neither Robeco Institutional Asset Management B.V. nor any of its affiliates guarantees the performance or the future returns of any investments. 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. Robeco Institutional Asset Management B.V. (“Robeco”) expressly prohibits any redistribution of the Information without the prior written consent of Robeco. The Information is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use is contrary to law, rule or regulation. Certain information contained in the Information includes calculations or figures that have been prepared internally and have not been audited or verified by a third party. Use of different methods for preparing, calculating or presenting information may lead to different results. Robeco Institutional Asset Management B.V. is authorised as a manager of UCITS and AIFs by the Netherlands Authority for the Financial Markets and subject to limited regulation in the UK by the Financial Conduct Authority. Details about the extent of our regulation by the Financial Conduct Authority are available from us on request.