Despite U.S. Rally, Analysts See Value Abroad

As Wall Street indexes continue to notch record highs, market strategists are urging investors to rebalance portfolios toward international markets, arguing that global diversification may offer stronger long-term returns relative to richly valued U.S. equities.

“Home bias is about as bad as it’s ever been in the United States,” said Dave Nadig, president and director of research at ETF.com, in an interview on CNBC’s ETF Edge this week.
“The average U.S. investor has far too much of their capital concentrated domestically.”

Nadig’s comments come after another bullish week on Wall Street:
the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite each gained about 1%, extending their year-to-date surge. Meanwhile, the iShares MSCI Emerging Markets ETF (EEM) climbed nearly 3%, closing Friday at a fresh 52-week high.

“Getting out of the U.S. — whether through a targeted regional fund or broad international exposure — is something we’re hearing more investors and advisors discuss,” Nadig said.
“It’s hard to bet against China in the long term.”

Emerging Markets Regain Investor Attention

Among those echoing Nadig’s optimism is Kevin Carter, founder and CIO of EMQQ Global, the investment firm behind the Emerging Markets Internet ETF (EMQQ) and the India Internet ETF (INQQ) — two vehicles offering exposure to high-growth digital and e-commerce companies across emerging economies.

Carter believes that renewed growth momentum in select emerging markets, particularly India, presents compelling structural opportunities for long-term investors.

The EMQQ Emerging Markets Internet ETF has surged 35% year-to-date, while the India Internet ETF is down 3%. Yet Carter remains bullish on India’s trajectory, citing demographic strength and consumption-driven expansion.

India: From Emerging Powerhouse to Global Growth Leader

Although India’s NSE Nifty 50 index has underperformed U.S. benchmarks so far in 2025 — up 5% year-to-date — the longer-term picture remains robust. Over the past five years, the Nifty 50 has soared 118%, driven by technology adoption, domestic consumption, and capital inflows.

“You now have the largest population, the best demographics, and the fastest growth rate in the world,” Carter said.
“That’s the same consumption-driven story we saw in China two decades ago.”

According to IMF forecasts, India’s GDP will expand by 6.2% in 2025, cementing its position as one of the world’s fastest-growing major economies. Earlier this year, India surpassed Japan to become the world’s fourth-largest economy, trailing only the U.S., China, and Germany.

China, India, and the Broader Global Rotation

While U.S. markets remain resilient amid a soft-landing narrative and strong corporate earnings, many strategists warn that valuations are nearing extremes. The S&P 500’s forward P/E ratio, now above 21x, significantly exceeds its long-term average, prompting some institutional allocators to shift exposure toward undervalued international equities — particularly in Asia-Pacific and emerging market internet sectors.

Carter sees parallels between the early 2000s rise of China’s consumer internet ecosystem and the present-day evolution of India’s digital economy, fueled by infrastructure upgrades, fintech adoption, and middle-class expansion.

“When GDP growth converges with digital penetration, you get exponential equity value creation,” Carter said.
“That’s the stage India is entering right now.”

Strategic Implications for Investors

Portfolio strategists suggest a measured increase in international allocations, particularly through emerging-market ETFs, infrastructure funds, and digital economy indexes.

Global macro factors — including slowing U.S. earnings momentum, stabilizing interest rates, and fiscal reacceleration in Asia — are creating conditions favorable for diversification.

“The world outside the U.S. is no longer just a hedge,” Nadig concluded.
“It’s increasingly where the next phase of growth will come from.”