As the end of 2025 looms, one trend looks sure to follow investors into the new year: a widespread reluctance to go all-in on American assets. It started back in April, when U.S. President Donald Trump’s so-called “Liberation Day” drove markets into a frenzy that saw a sell off of American stocks, government bonds and the U.S. dollar. The trades became known as “Sell America” — and in some circles, “ABUSA,” an acronym for the term “Anywhere But the USA.” The intervening months brought the “TACO” (Trump Always Chickens Out) trade when a series of policies were announced then rolled back . “The average investor has far too much of their money sitting in the United States,” ETF.com’s Dave Nadig told CNBC last month . “Getting out of the U.S. somehow … is something I’m hearing more and more investors talk about.” The ‘Trump Dump’ Despite Wall Street’s major averages rebounding to hit multiple record highs since the tariffs-induced panic, international investors have a lingering appetite for portfolios that aren’t dominated by U.S. equities, according to Daniel Coatsworth, head of markets at AJ Bell. U.S. trade policy drove the first phase of what Coatsworth referred to as the “Trump Dump” — a trend he argued is still in play, but evolving. “We’ve seen a pickup in these global funds that exclude the U.S.,” he explained. “Lots of private investors will just buy global funds every month, and they will just want to get broad exposure. [But] now we’re seeing that people are discovering these funds where actually you can buy a global fund, but it doesn’t include the U.S., so it means they’re still getting very broad exposure to different countries, but they’re deliberately excluding the U.S.” Many global benchmarks suggest international stocks have outperformed the U.S. stock market so far this year. The MSCI World ex USA Index – which encompasses large- and mid-cap companies across 22 developed markets outside of the U.S. – has gained 24% since the start of the year, versus the S & P 500 ‘s year-to-date gain of around 15.6%. Coatsworth argued two factors were likely driving investors to restrain their allocation to American assets. “One might be that they feel that they’ve already got enough exposure,” he told CNBC. “They don’t want to keep adding to it, because the U.S. accounts for such a big chunk of the global stock market, and the other reason is just perhaps because they don’t like what’s going on in America. Some people disagree with the way the government’s being run. So there’s a bit of a rethink, really, in terms of what asset allocations people have.” With unpredictable White House policy continuing to shake markets even into October , questions continue to arise over U.S. equity valuations — and whether American stocks are in an AI-driven bubble . “One thing I know that our clients are concerned about is the extreme concentration of the American stock market, especially when compared to Europe, which is a lot more diversified,” Christoph Schon, lead principal of investment decision research at Danish investment management firm SimCorp, told CNBC. He pointed to the so-called Magnificent 7 stocks — Apple , Amazon , Alphabet , Meta , Microsoft , Nvidia and Tesla — which make up around a third of the S & P 500’s market capitalization. “They are concentrated in three sectors: information technology, communication services, and consumer discretionary, all of which are highly cyclical,” Schon said. “In contrast, the top 10 names in the STOXX Europe 600 represent 17% of its market cap — half of the Mag 7 — and are from the technology, healthcare, energy, financial, and consumer sectors.” Louis Lau, director of investments at California-based Brandes Investment Partners, said he is also seeing evidence that demand for international assets remains elevated. ” This year, Brandes has seen the largest inflows into our International (non-U.S.), Small-Cap and Global strategies,” he told CNBC. “While international equities have experienced the most inflows at Brandes, investors are still putting money to work in U.S. equities, but with a value tilt, either with a small cap focus or as part of a more diversified global portfolio.” ‘Hedge America’ Not everyone agrees that investors are diversifying away from America in swathes, however. Amol Dhargalkar, managing partner and chairman at risk management advisory Chatham Financial, told CNBC that his experience of the trend was more in line with a “Hedge America” mindset. “Some of the policies put forward by the administration in the U.S. that has led to … some selling pressure, indirectly, on the dollar,” he said during an interview in London last month. But he added: “We haven’t seen the sell America concept, others have said that, but probably more ‘Hedge America.'” Nick Niziolek, co-CIO at Illinois-headquartered Calamos Investments, argued investors were largely comfortable with vast allocations to U.S. assets. “In my opinion, the ‘peak’ interest in the [ex.-U.S.] asset class occurred shortly after the April pull-back in U.S. equity markets where investors began to notice the outperformance of overseas risk assets and some started to re-balance their portfolios,” he told CNBC. “As U.S. equity markets have rallied back, my sense is most investors are content with the strong returns they have experienced.” However, he noted that there was a divergence between U.S.-based and international investors. “My sense is this is a different experience for overseas investors,” he said. “A European investor that invested in the S & P 500 this year would have realized a 14% return year-to-date – but at the same time the euro appreciated 12% – so their net-return was only [around] 2%,” he said in October. “If they were to keep their money at home, the MSCI Europe index would have returned 14%, plus they would have benefitted from their currency appreciating 12% against the USD. So, the asset allocation decision has become more significant for overseas investors, and as a result we believe we are seeing more investors keeping their incremental investment dollars at home and investing in local markets.”
Investors hesitant on U.S. assets after ‘Sell America’
