U.S stocks are enjoying an unprecedented outperformance over emerging markets. Can it continue, or is now the time to rotate money overseas? There is beginning to be the belief that if the trade tensions get resolved, and tariffs removed, it will renew global growth of which the biggest beneficiaries would be emerging markets.
Historically when stocks are in bull mode, bullish money managers will take on more speculative positions such as higher beta names, including increasing exposure to emerging markets. On the other hand, investors are positioning themselves for lower stock prices, riskier assets such as emerging market stocks tend to underperform, particularly relative to developed markets.
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