Trying to time markets, factor styles, or regions is notoriously difficult. That’s why we maintain a long-term strategic outlook. Well before “Liberation Day”, we had our doubts about the narrative of US exceptionalism—especially from a fundamental standpoint.
In fact, David Blitz of Robeco has recently published a sharp and concise analysis that echoes what we’ve been stressing: the US large cap outperformance over the past decade has been largely driven by multiple expansion, not earnings growth. We see this as one of the market’s most persistent strategic illusions.
With recent events shaking confidence and raising questions about the stability of the US, this might finally be the catalyst: we believe the most compelling opportunities now lie outside the overpriced US large-cap space. In particular, European small caps are highly attractive, showing stronger fundamental growth (!) than US large caps from 2015 to 2024 – yet they are currently trading at historically deep valuation discounts.
