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Looking beyond US for global ETF exposure

US-equities/ETFs/AXA-Investment-Managers/fixed-income/

8 July 2025
| By Staff |
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Investors in US Treasury ETFs could expect to experience underperformance as a result of US government actions going forward, according to AXA IM.

The fund manager said investors are increasingly going into fixed income ETFs, but they want greater compensation for holding those invested in US assets. 

“ETF investors want greater compensation for holding US assets – hence the rise in US Treasury bond yields relative to those of other countries,” said AXA IM chief investment officer for core investments, Chris Iggo.

“In fact, in most dimensions, risk premiums are increasing. While none of the bond market moves have been particularly dramatic, ETF US Treasury investors may be impacted by ongoing relative underperformance.

“At the very least, unless cuts to federal spending can be meaningful, ETF investors will be faced with significant new and refinancing issuance from Washington in the next few years.”

Meanwhile, ETFs investing in US equities have seen US-listed companies report strong earnings growth with both the S&P 500 and the Nasdaq up by around 6 per cent since the start of the year but this is less than can be achieved in other markets. 

US equity ETFs include the Betashares Nasdaq 100 ETF, Global X Russell 2000 ETF, and the Vanguard US Total Market Shares Index ETF.

“The economy is not in recession and there is plenty of liquidity in money market accounts. Additionally, technology is moving quickly and given the rapid growth in artificial intelligence applications, this could be a source of exceptional growth and productivity booster in the US and beyond,” he said.

Despite this, Iggo believed risk-adjusted returns look more attractive in other regions such as Europe and Asia. In particular, European and global equity ETFs are already reporting strong flows since the start of the year. 
Since the start of 2025 to 30 June, the MSCI World index has returned 9.4 per cent, while MSCI Europe has returned 23 per cent in US dollar terms.

“Compared to the US, risk-adjusted returns look more attractive in other regions and the realignment of global trade and political alliances could herald an improved relative performance in Europe, Asia – because of China – and other emerging markets in the years ahead.”
 

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