Despite elevated correlations; however, the dispersion of returns has also picked up, giving rise to alpha opportunities (Chart 2). While predicting COVID-like shocks is impossible, some persistent macro investment trends have remained intact this year. The outperformance of U.S. equities has continued during the historical COVID market turmoil. We have been overweighting U.S. stocks versus EAFE for several months, and our view remains intact that this trend will run further as we exit COVID. The U.S.’s tech leadership could accelerate in a post-COVID, increasingly digital world.
After accounting for currency fluctuations, U.S. stocks have outperformed EAFE by over 800 basis points (bps) in 2020. Keep in mind that Nasdaq 100 stocks are up couple percent in 2020 while some major equity markets are still down more than 20%.