Indrani De, CFA, PRM
Head of Global Investment Research
David McNay, CFA
Director, Global Investment Research
Key takeaways:
- The FTSE All World Index returned 23.1% in 2025. Outperforming the US by the widest margin in 16 years
- Broadening of the global equity rally – by industry and geography – was a key theme. Meanwhile the US became even more concentrated. The top 10 names in the FTSE USA are now nearly 40% and the top 2 stocks weigh more than the combined weight of the Energy, Utilities, Real Estate, Telecommunications and Basic Materials industries.
- Markets rerated in 2025, with richer valuations leaving less room for multiple driven index growth; this puts more emphasis on delivery of earnings growth. Developed Asia ex Japan and Emerging Markets have the strongest forward EPS growth estimates.
- In many ways, 2026 looks like a continuation of 2025, rather than a reset. Several factors which supported Developed ex US and EM are likely to persist in 2026 providing tailwinds to ex-US assets. Absent decisive leadership, frequent shifts may make short-term, tactical trading, difficult. Diversification benefits may smooth returns across more medium- and long-term strategic positions.
Points of differentiation:
- Eyes on Japan: in 2026 Japan corporate governance reform could unlock big shareholder value but there is the risk of an unwind in the Yen carry trade which would have a big impact on global liquidity
- Many tailwinds that drove outperformance in 2025 persist into 2026. Frequent shifts in leadership may make tactical trading even more difficult, favouring broad diversification.
What does our research mean for investors?
Broadening of the global equity rally was the key theme of 2025, and may be set to continue in 2026.
