Four reasons to consider exposure to active global equities
Investing around the world offers more opportunities, increased diversification and potentially better risk management.
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“See the world” is advice often dispensed by seasoned travellers who know the benefits of experiencing different cultures, locations, and perspectives. When it comes to investing, “go global” is similarly sound advice for the multiple benefits a global approach can deliver.
1. Access to a much broader set of opportunities
Global investors play on a much bigger field. Across the world, there are more than 58,000 publicly listed companies. That far surpasses the number of public firms in any country or even a broad region such as the Eurozone or Asia-Pacific. Active investors can fully explore the opportunities in markets around the world because they, unlike passive strategies, are not limited to owning the companies included in major benchmarks.
Active managers can also be more discerning. Passive managers must own every company in the relevant index, regardless of each company’s current circumstances. Active managers conduct in-depth research to find the companies they believe offer the greatest promise—and avoid those whose prospects are more limited or even declining.
2. A borderless approach with no geographic limitations
Global investors don’t put borders around their opportunities. That can make good sense because over the multi-decade time horizons many investors have, no single country is likely to have a monopoly on long-term performance leadership. Of course, the US market may seem like the exception to that rule because US stocks have been on a 17-year bull run that only the COVID-19 pandemic could temporarily interrupt.
Watch the video below to see Alex Tedder, CIO Equities, explain why active global equities can form a valuable part of portfolios:
Still, it’s important to note that the extraordinary US market performance came from only a handful of mega-cap stocks, known as the “Magnificent Seven”, which are mostly in the technology sector. Absent those stocks, other equity markets, such as Europe, have delivered returns comparable with the US. For investors who might be concerned about their portfolios now being overly concentrated in such a small group of US stocks, a global strategy can provide much-needed diversification.
Even though globalisation was a multi-decade trend, we still don’t have a one-world economy. In recent years, that trend has shifted in the opposite direction towards deglobalisation. The supply-chain disruptions that occurred during the pandemic accelerated this transition, as more companies looked to establish vendor relationships with firms in their home country or nearby. The heightened tariffs imposed by the second Trump administration also brought a realignment of global trade partnerships.
All these changes have increased the potential benefits of not having any geographic limitations on your portfolio. Given that different factors drive the economies of different markets and regions, a global investor can enjoy all the usual benefits of diversification. They have exposure to markets that may be performing well in a particular global climate and boosting returns, while also offsetting exposure to markets that might be facing challenges.
Equity market leadership is not static
Past performance is not a guide to future performance and may not be repeated. Europe = Europe ex UK. Source: LSEG Datastream, MSCI and Schroders. Data to 10 March 2026 in US dollars.
3. Freedom to go where the greatest growth potential is
Simply put, the US technology sector is not the only game in town. Other sectors, such as health care and energy, also have promising long-term growth stories.
A portfolio that invests in both developed and developing markets can also take part in the higher growth potential of emerging markets, which have less mature economies than their developed-market counterparts, and that translates into higher growth prospects. All the trends in these countries—such as increased urbanisation and a growing middle class—are creating significant opportunities for the companies that serve these customers.
For investors, though, growth doesn’t have to come just from expanding economies and increasing profit margins. Growth can also come from substantial increases in companies’ share prices. On this front, global investors have advantages as well. In certain markets, such as the US, share valuations are elevated. Even as companies greatly increase their earnings, the multiples investors pay for those earnings have been extraordinarily high relative to their history. An active global manager can find markets, sectors, and companies where valuations are less elevated—and the opportunities for growth through share price appreciation could be higher.
4. More opportunities to mitigate risk in periods of extreme volatility
On many fronts, stock markets were full of good news for investors in recent years. The reign of US tech stocks delivered considerable returns not only for US equity portfolios but also for global equity strategies that have US market exposure. In 2025, other markets also asserted themselves, as regions such as Europe and Asia-Pacific posted better returns overall than the US equity market did.
Still, amid all the encouraging developments, short-term circumstances—such as tariff announcements, shifting sentiments about the impact of AI, and major geopolitical events such as US/Israeli attacks on Iran—can bring significant market disruptions.
Global active managers have multiple options to mitigate the risks these disruptions bring. As noted, global managers can invest across geographies in both developed and emerging markets. They can also adjust their allocations to sectors and are not limited, as passive strategies are, to the sector weights of a particular index. Depending on the portfolio mandate, they may also have the flexibility to invest across large- and small-cap companies and to tilt towards different styles such as value or growth. With that flexibility, managers can maintain exposure to whichever segments are most in favour in different market scenarios. When markets are turbulent, it helps to have a full array of choices to limit the impact of downturns.
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