Natixis sees a growing shift away from US equities toward Europe and emerging markets, as valuations, diversification needs and geopolitical risks reshape global asset allocation.
Summary:
- Natixis highlights growing rotation out of US equities amid changing macro backdrop
- Europe, Japan and emerging markets increasingly favoured on valuation and diversification grounds
- US exceptionalism narrative fading after tariffs and geopolitical shocks
- European earnings expectations improving, valuation gap attracting flows
- Value stocks seen gaining traction over growth in current cycle
- Middle East conflict and oil surge adding uncertainty to global outlook
- HSBC notes US resilience despite rotation, supported by tech and energy sectors
Natixis Investment Managers signalled a notable shift in global equity allocation trends, with investors increasingly diversifying away from US equities and rotating toward Europe, Japan and emerging markets. The change in sentiment comes against a backdrop of heightened geopolitical tensions, particularly in the Middle East, alongside rising oil prices and a more uncertain macroeconomic outlook.
The firm highlighted that the narrative of US exceptionalism, which dominated markets in recent years, has begun to fade. A combination of policy shifts, including tariffs, and geopolitical developments has prompted investors to reassess the relative attractiveness of global equity markets. In contrast, Europe is seeing renewed interest, supported by improving earnings expectations and more attractive valuations. Forecasts for European corporate earnings growth have strengthened notably, helping to close the gap with US markets.
Natixis also pointed to growing opportunities in emerging markets, particularly across Asia and parts of Latin America, where structural growth themes and diversification benefits are drawing increased attention. Japan and South Korea were highlighted as areas of relative strength, while broader Asian exposure remains a core allocation for many investors despite ongoing geopolitical risks.
From a style perspective, the environment is seen as increasingly favourable for value investing, with investors finding opportunities in underappreciated sectors and regions. While the US continues to offer pockets of value, particularly outside the largest technology names, concentration risks in mega-cap stocks are encouraging broader diversification.
At the same time, the outlook remains highly uncertain. Elevated energy prices and geopolitical instability are weighing on confidence, while the global growth backdrop is becoming more difficult to predict. This is reinforcing the need for a more agile and selective investment approach, with sector opportunities identified in areas such as technology, artificial intelligence and healthcare.
Separately, HSBC Private Bank notes that while investors have been rotating away from US equities, the market has demonstrated resilience during recent geopolitical shocks. The strength of the US energy sector and the relative insulation of large technology companies from oil price volatility have helped support US equity performance, even as diversification trends gather pace.
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Natixis Investment Managers is a global asset management firm headquartered in Paris, operating as part of Groupe BPCE, one of France’s largest banking groups. The firm oversees a multi-affiliate model, bringing together a range of specialised investment managers across asset classes, including equities, fixed income, alternatives and thematic strategies. Through this structure, Natixis offers diversified investment capabilities to institutional and retail clients globally, with a strong presence in Europe and the US.
