Investors may want to consider boosting their exposure abroad — even with U.S. stocks around record highs

Financial experts, including ETF.com's Dave Nadig and EMQQ Global's Kevin Carter, are urging U.S. investors to increase international exposure, citing significant home bias and better value opportunities abroad. Nadig points to the iShares MSCI Emerging Markets ETF reaching a 52-week high, while Carter highlights India's long-term growth potential, driven by its large population, favorable demographics, and projected 6.2% GDP growth in 2025, positioning it as a compelling emerging market despite varied short-term fund performance.

Analysis

Investors may want to boost their exposure overseas. “Home bias is about as bad as it’s ever been in the United States. The average investor has far too much of their money sitting in the United States,” ETF.com’s Dave Nadig told CNBC’s “ETF Edge” this week. Nadig, the firm’s president and director of research, delivered his concerns during a record week on Wall Street. The Dow, S&P 500 and Nasdaq gained another one percent this week. Meanwhile, the iShares MSCI Emerging Markets ETF gained almost 3%. As of Friday’s close, the ETF closed at a 52-week high. According to Nadig, going abroad may offer a better value. “Getting out of the US. somehow, whether it’s in a very specific fund or a very specific country, or just broad international exposure, is something I’m hearing more and more investors and advisors talk about,” he added. “It’s hard to bet against China in the long term.” EMQQ Global Founder and CIO Kevin Carter also sees benefits from putting money to work abroad. His firm is behind the Emerging Markets Internet and the India Internet ETFs. Both funds are designed to provide investors with exposure to internet and e-commerce companies in emerging markets. The Emerging Markets Internet ETF is up 35% so far this year, while the India Internet ETF is down 3%. However, Carter is still particularly bullish on the country. India’s NSE Nifty 50 has been underperforming the U.S. markets so far this year — up 5%. But over the last five years, it has surged 118%. “You now have the largest population, you have the best demographics, you have the fastest growth in the world, and that’s driving consumption,” said Carter. “That’s the same thing we saw in China over the last 20 years.” India’s GDP is expected to grow by 6.2% in 2025, making it one of the fastest-growing major economies, according to IMF data. This year, India surpassed Japan to become the world’s fourth-largest economy. Industry experts are highlighting significant U.S. investor home bias, suggesting a strategic shift towards international equities may be warranted. Despite a record week for U.S. indices, which saw gains of around 1%, the iShares MSCI Emerging Markets ETF (EEM) outperformed with a nearly 3% gain, reaching a 52-week high, indicating potential valuation opportunities abroad. Thematic exposure to emerging markets via internet and e-commerce also shows divergent trends; the Emerging Markets Internet ETF (EMQQ) has surged 35% year-to-date, while the India Internet ETF (INQQ) has declined 3%. However, the long-term outlook for India remains particularly bullish, supported by strong fundamental drivers. With the world's largest population, favorable demographics, and a projected GDP growth of 6.2% in 2025, analysts draw parallels to China's consumption-led expansion over the past 20 years. This long-term thesis is further supported by the Nifty 50 index's 118% surge over the last five years, even as its 5% year-to-date gain has underperformed U.S. markets.

Key Decisions for Investors

• Investors heavily weighted in U.S. equities should consider reallocating a portion of their portfolio to broad international and emerging market exposures to mitigate concentration risk and capture potential value.
• The recent underperformance of India-focused assets, such as the INQQ ETF, could represent a strategic entry point for long-term investors who subscribe to the country's fundamental growth story, driven by strong demographics and projected GDP expansion.
• Evaluate the trade-off between broad emerging market ETFs like EEM for general diversification and more concentrated thematic funds like EMQQ, which has shown significant recent momentum, to align with specific high-growth theses such as internet and e-commerce.