SustainAbility: A narrowing equity world with broadening opportunity

For nearly 15 years, US equities – especially mega-cap tech stocks – were the undisputed leaders of global markets. From the post-Global Financial Crisis (GFC) recovery through the Artificial Intelligence (AI) boom, the mantra was simple: own US tech and win. That playbook worked, until it didn’t.

Last year changed the game as investors witnessed a pivotal shift in equity market dynamics. The US market underperformed relative to global peers and some of the sharpest rotations in years unfolded. Global equities saw a 10% correction at one point and US tech valuations hit historical extremes, prompting investors to look elsewhere.

That shift opened a new horizon: Europe staged a comeback, Asia regained momentum and even the UK showed signs of revival. As we enter 2026, this trend isn’t fading but continuing. Think of it as a global relay race - more runners, more winners.

The equity world is narrowing in terms of concentration but broadening in opportunity.

From US exceptionalism to global breadth

For years, the equity market story was simple: own US tech. But last year, that narrative cracked. While the S&P 500 still posted solid gains, the real excitement came from outside the US.  European equities rallied on easing inflation and fiscal stimulus, while Japan and emerging markets surged as the US dollar softened. Even China, after a tough start, bounced back thanks to aggressive policy support.

The world’s growth engines are no longer parked in Silicon Valley – they’re revving up in Frankfurt, Shanghai, and Tokyo. This shift matters because it signals a structural shift: investors can no longer rely on a handful of US names to carry portfolios.

The world’s growth engines are no longer parked in Silicon Valley – they’re revving up in Frankfurt, Shanghai, and Tokyo.

Persistent momentum into 2026

Three powerful shifts are powering this transition, and they may not be reversing anytime soon:

• Policy divergence across the globe: The US Federal Reserve held rates steady for most of 2025, signalling patience. Meanwhile, Europe and UK cut rates, while China unleashed trillions in stimulus to reignite growth. That’s a global environment increasingly supportive of international equities, particularly in Asia and Europe, as capital chases growth and yield alternatives.
• Regional growth re-acceleration: China’s stimulus – targeted at infrastructure, green energy, and domestic consumption – is gaining steam. Europe is reviving industrial investment. The UK is seeing inflation cool, with corporate earnings holding firm. These aren’t one-off blips; they’re structural drivers for 2026 and beyond.
• Valuation rebalancing: After years of US dominance, US tech stocks trade at or near historical highs, while European, UK and Japanese markets offer significant valuation cushions. If performance mean-reverts, international markets are primed for a catch-up. In other words, bargains are back and they’re not in the usual places.

The discipline to capture broadened opportunities

For over 20 years, our sustainable equity strategy has been built on one principle: invest in companies that create long-term value. Today, I believe that this means concentrating on businesses aligned with long-term transformative themes:

• Digital world: AI’s impact could surpass the internet era, buoying businesses across sectors
• Natural world: Healthcare innovation continues to unlock new treatments and cures
• Physical world: Electrification is driving massive infrastructure investment

It’s not about chasing hype – it’s about owning companies that can thrive through cycles. Alongside these, we’re seeing a renaissance in essential sectors such as banks, insurance, and utilities. This is creating a compelling mix of old and new opportunities within balanced portfolios.

While we are positive over the long term, we recognise the macroeconomic and geopolitical environment is uncertain.  In our view, the way to navigate more short-term uncertainty of this nature is focus on finding high quality sustainable and financial companies and using diversification to mitigate risk.

The bottom line

In a narrowing world, opportunity is broadening. This year isn’t about abandoning the US or chasing the latest fad. It’s about playing the whole field – embracing a world where winners are more diverse – across regions, sectors, and themes. After over a decade of US dominance, 2025’s volatility and policy rebalancing marked a regime shift. We believe that the global landscape now offers fertile ground for disciplined investors focused on sustainability, value creation and valuation.

After over a decade of US dominance, 2025’s volatility and policy rebalancing marked a regime shift.

For professional investors only. This material is not suitable for a retail audience. Capital at risk. This is a financial promotion and is not investment advice. Past performance is not a guide to future performance. Reference to any security is for information purposes only and should not be considered a recommendation to buy or sell.

The value of investments and any income from them may go down as well as up and is not guaranteed. Investors may not get back the amount invested. Portfolio characteristics and holdings are subject to change without notice. The views expressed are those of the author at the date of publication unless otherwise indicated, which are subject to change. Forward looking statements are subject to certain risks and uncertainties,  Actual outcomes may be materially different from those expressed or implied.