Wealth Management
Global investors are increasingly reallocating away from U.S. equities, even as Wall Street continues to notch record highs. Fund-flow data from Société Générale and EPFR show record inflows into global equity funds that exclude U.S. stocks, signaling a push for broader diversification.
Europe and emerging markets have benefited most from this trend, with European equity products seeing record inflows this year. Currency effects and heightened U.S. policy risks under the Trump administration have also encouraged investors to look abroad.
While many acknowledge the U.S. remains the world’s deepest and most dynamic market, its high valuations and narrow leadership have amplified concentration risks.
Finsum: Portfolio managers showed a more globally balanced approach, blending exposure to the U.S. with selectively priced opportunities overseas.
The Pulse survey shows that advisors are shifting toward more flexible mandates, reducing allocations to core fixed income while increasing exposure to multisector fixed income and alternatives. U.S. large-cap stocks—especially growth and blend styles—continued to dominate allocations, fueled in part by AI tailwinds and earnings strength.
Active strategies also gained share, including active ETFs, which surged in usage over the past year. On the fixed-income side, core bond exposure was trimmed as advisors looked to diversify diversifiers like high yield, multi-sector, and credit-sensitive sectors.
The average model portfolio holds around 16 distinct positions, and allocations to alternative strategies increased, with defined-outcome and multi-strategy mandates among the fastest-growing categories.
Finsum: Advisors should look to factor portfolio tools to leverage in construction to better serve their clients’ needs.
Stable value funds are a conservative investment option that aim to deliver higher returns than cash while preserving principal. They invest in high-quality bonds that are insured through contracts like guaranteed investment contracts or group annuities, which protect investors from losing money.
These funds are available only in tax-advantaged retirement plans such as 401(k)s, and according to MetLife, more than 80% of defined contribution plans offer them. Stable value funds are often compared to money market funds, since both are designed for safety and stability. Over the 15 years ending March 2023, stable value funds delivered an annualized return of 2.99%, significantly higher than the 0.55% produced by money market funds.
While money markets adjust quickly to interest rate changes, stable value funds respond more gradually, which can lead to short-term underperformance when rates are rising. Researching stable value funds involves looking at the fund’s goals, portfolio composition, fees, and historical performance.
Finsum: Advisors should also evaluate management tenure and ensure the fund’s returns align with its stated objectives for clients
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While standard ETFs are built for long-term investors, more complex products like leveraged, inverse, and synthetic ETFs are designed for short-term or specialized strategies and carry higher risks. Leveraged ETFs amplify daily index returns, but compounding effects mean they often underperform over longer periods, making them unsuitable for buy-and-hold investors.
Inverse ETFs, by contrast, rise when their benchmark falls and are typically used as temporary hedges against downturns rather than core holdings.
Synthetic ETFs take a different approach by using swap agreements with banks to replicate index performance instead of directly owning the securities, which reduces tracking error but introduces counterparty risk. These advanced products can be useful in the right hands, yet they require a clear understanding of their mechanics and limitations.
Finsum: These tools can be tactical moves, not long-term wealth building, but serve short term client desires.
The U.S. stock market set new highs in Q3 2025, and while index funds largely outperformed, active funds were more mixed. Among the 10 largest active funds, only the JPMorgan Large Cap Growth Fund stood out, returning 9.3% and ranking in the top third of its category, while the Dodge & Cox Stock Fund lagged with just 3.2%.
Index funds fared better, with the Vanguard Total Stock Market Index Fund delivering 8.2% and ranking highest among its peers, though the Vanguard Mid Cap Index Fund landed near the middle of its category.
Over the past three years, seven of the 10 largest active funds have outperformed their categories, led by two Capital Group funds that landed in the top decile of large-cap blend. Index funds also showed consistent strength, with S&P 500 trackers like Vanguard, Fidelity, and iShares ranking in the top quartile over that period.
Finsum: Investors looking to capitalize on falling interest rates should look to large cap growth as they tend to be more interest rate sensitive.
Global real estate is shifting from traditional “visible” assets like office towers and shopping malls to “invisible” property such as data centers. These facilities have become essential infrastructure as cloud computing and AI workloads demand massive amounts of power, cooling, and networking. According to CBRE, 95% of major investors plan to boost their allocations to data centers in 2025, with many committing $500 million or more.
The surge in demand is driving enormous capital requirements, with hyperscale facilities costing billions to build. Boston Consulting Group estimates that $1.8 trillion will be needed globally by 2030 to keep pace with AI and cloud growth.
Despite funding challenges, investors continue to reallocate away from conventional real estate sectors toward alternatives like data centers, battery storage, and related infrastructure. While construction costs and financing hurdles pose risks, institutional capital remains active, signaling that real estate’s future will be increasingly tied to digital infrastructure.
Finsum: Artificial intelligence may also reshape physical office demand as companies adjust headcount and space needs.