FOR INSTITUTIONAL INVESTOR USE ONLY

This site is for Institutional Investor use only and not for public use or distribution. The information contained on this site is for informational purposes only without regard to the investment objective, financial situation or specific needs of any particular investor. It is not intended for use by institutional investors in a jurisdiction where distribution or purchase is not authorized.

An “Institutional Investor” means any:

  • bank, savings and loan association, insurance company or registered investment company;
  • investment adviser registered either with the SEC under Section 203 of the Investment Advisers Act or with a state securities commission (or any agency or office performing like functions);
  • person (whether a natural person, corporation, partnership, trust or otherwise) with total assets of at least $50 million;
  • governmental entity or subdivision thereof;
  • employee benefit plan, or multiple employee benefit plans offered to employees of the same employer, that meet the requirements of Section 403(b) or Section 457 of the Internal Revenue Code and in the aggregate have at least 100 participants, but does not include any participant of such plans;
  • qualified plan, as defined in Section 3(a)(12)(C) of the Exchange Act, or multiple qualified plans offered to employees of the same employer, that in the aggregate have at least 100 participants, but does not include any participant of such plans;
  • FINRA member or registered person of such a member; or
  • person acting solely on behalf of any such institutional investor.

By accessing this site you confirm that you are an Institutional Investor, you agree not to forward or make the contents of this site available to any person who is not an Institutional Investor, and you agree to be subject to Victory Capital’s user agreement

Redirect me to VCM.com

Thank you for your interest in Victory Capital Management. To download this document, please complete the registration form below. You will only need to complete this form one time to access site content.






  • Victory Capital may use my email to send out periodic news, announcements, and product information.

*All fields are required
Submit

Think locally, act globally

It has been hard to argue with the results of a heavy allocation to U.S. equities over to the last several years. In 2018 alone, U.S. stocks have outperformed almost every other major stock market around the globe. Through late October, the MSCI World Index has been essentially flat year-to-date. However, when you remove just the U.S. from the index, the YTD return drops significantly to more than -7.5%.

Such home cooking has worked for domestic investors this year, and it’s actually part of an ongoing trend that has sustained for the past seven years. But trends don’t last forever, and regional equity returns have proven to be cyclical.

MSCI USA vs MSCI World ex-US

When put in a historical context, the recent outperformance of domestic equities relative to non-U.S. major markets is not unusual in magnitude or length. The accompanying chart shows trailing seven-year total return differences between the MSCI USA¹ and MSCI World ex-US² Indexes across time.

In the context of the last four decades, we have regularly seen runs of five to seven years (or more) when assessing the performance of U.S. versus foreign stocks. Given this recent stretch of outperformance by domestic stocks, and using history as our guide, the current environment may represent an intriguing opportunity for investors who have been under-allocated to global stocks. Is now the time to pivot strategically and potentially capture some of the benefits of global diversification?

The cyclicality illustrated in the chart is a reminder of the underlying benefits of global diversification. We all know that past performance does not guarantee future results, and while the chart above suggests that we might expect U.S. stocks to underperform their foreign counterparts going forward, it’s entirely possible for the existing trend to endure. Or, maybe domestic equities could begin underperforming tomorrow. The point is—nobody can predict the future.

But this is exactly why professional investors embrace the concept of diversification. In fact, being globally diversified doesn’t require you to make a bet on a specific country or region, nor does it suggest market timing. Rather, having sufficiently diversified global equity exposure helps ensure that you will participate in the best performing stock markets over time, regardless of whether that is driven locally or globally. However, please keep in mind that diversification neither assures a profit nor eliminates the risk of experiencing investment losses.

We believe that investors may be able to use this market volatility to pare down domestic allocations while strategically gaining more global exposure and the potential benefits of a broader diversification.

 

1 The MSCI USA Index is designed to measure the performance of the large and mid cap segments of the US market.

2 The MSCI World ex USA Index captures large and mid cap representation across 22 of 23 Developed Markets (DM) countries*--excluding the United States.


Victory Capital Management, Inc. is a Registered Investment Advisor. The information in this article is based on data obtained from recognized services and sources and is believed to be reliable. Any opinions, projections or recommendations in this report are subject to change without notice and are not intended as individual investment advice. Not to be used as legal or tax advice.

©2018 Victory Capital Management Inc.

An investor should consider a fund’s investment objectives, risks, charges and expenses carefully before investing or sending money. This and other important information about funds can be found in the fund’s prospectus, or, if applicable, the summary prospectus. To obtain a copy, visit the ETF prospectus page or Mutual Fund prospectus page. Read a prospectus carefully before investing.

Investments involve risk including possible loss of principal. The value of the equity securities in which the fund invest may decline in response to developments affecting individual companies and/or general economic conditions. Dividends are never guaranteed. International investing involves special risks, which include changes in currency rates, foreign taxation and differences in auditing standards and securities regulations, political uncertainty, and greater volatility. Emerging markets involve heightened risks related to the same factors as well as increased volatility and lower trading volume. You may lose money by investing. There are no guarantees the funds will achieve their investment objectives and strategies may be unsuccessful.

ETFs have the same risks as the underlying securities traded on the exchange throughout the day. Redemptions are limited and often commissions are charged on each trade, and ETFs may trade at a premium or discount to their net asset value. There can be no assurance that an active trading market for shares of an ETFs will develop or be maintained. The ETFs are not actively managed and may be affected by a general decline in market segments related to the Indexes. The ETFs invest in securities included in, the Index, regardless of their investment merits. The performance of the ETFs may diverge from that of the Indexes. 

LinkedIn, Twitter, and any other social media platform are owned by third parties unaffiliated with Victory Capital. Victory Capital is not responsible for the privacy or security policies at these sites or other third party sites to which they provide further links. For Victory Capital’s privacy policy, please visit the Policies page on www.vcm.com. Please do not post any information you wish to keep private on this page.

Victory Capital does not endorse and is not responsible for any ads, content, products, advice, opinions, recommendations or other material of third party sites that may be promoted via advertising within social media properties.

This material does not constitute a distribution, offer, invitation, recommendation, or solicitation to sell or buy any securities; it does not constitute investment advice and should not be relied upon as such.  Investors should seek independent legal and financial advice, including advice as to tax consequences, before making any investment decision.

Mutual funds distributed by Victory Capital Advisers, Inc. ("VCA"). ETFs distributed by Foreside Fund Services, LLC. Victory Capital Management Inc. is the adviser to the VictoryShares ETFs and Victory Funds. Victory Capital is not affiliated with Foreside Fund Services, LLC.

Nasdaq is a registered trademark of Nasdaq, Inc. and its affiliates (together,“Nasdaq”) and is licensed for use by Victory Capital. The product(s) are not issued, endorsed, sold, or promoted by Nasdaq. Nasdaq makes no warranties as to the legality or suitability of, and bears no liability for, the product(s). Nasdaq is not affiliated with a fund or advisor.

For specific questions about your account or other customer-service related inquiries, please contact Victory Capital directly.