At the recent Midyear Market Outlook Symposium, TMX VettaFi Investment Strategist Cinthia Murphy led a timely discussion on the shifting global investment landscape. With uncertainty building in U.S. markets and international equities outperforming in 2025, investors are increasingly asking whether this trend has staying power.
The panel featured WisdomTree’s Jeremy Schwartz and Wasatch Global Investors’ David Powers. Conversation centered on the growing case for global diversification, the potential impact of tariffs, geopolitical risk, and why the second half of the year could favor international exposure.
Breaking Free From U.S. Recency Bias
To open the session, Murphy highlighted the persistent reluctance of U.S. investors to allocate meaningfully to international markets, despite strong recent performance abroad. She framed the issue with a pointed question:
“Is that a problem of recency bias? And to Jeremy’s point, is U.S. exceptionalism truly earned, or are we just skeptical about the longer-term growth story in developed international markets?”
With global equities outperforming in 2025 and the U.S. potentially entering a late-cycle phase, the panel explored why many investors remain hesitant to allocate overseas and why that may be changing.
Schwartz acknowledged the historical strength of U.S. markets. He cited innovation, superior shareholder returns, and resilient growth since the financial crisis. But he warned that these successes may have entrenched a bias, one that overlooks improving fundamentals abroad.
Schwartz pointed to rising dividends, share buybacks, and improved governance in Europe and Japan — all signs that international markets are evolving in ways investors haven’t fully appreciated.
Powers supported this view, noting structural shifts overseas aligning with favorable macro trends. As the U.S. shows signs of slowing, developed markets may be better positioned than they’ve been in years to attract renewed investor interest.
Tariffs, Trade, & the "10/30" Framework
As the discussion shifted to global policy risks, Cinthia Murphy polled the audience on a relevant topic:
“Which country or region are you most interested in over the next three months, or for the second half of the year, when thinking about global equity allocation?”
Digging deeper into the question, Schwartz explained that markets have largely digested what is known as the “10/30 tariff framework.” That framework refers to a 10% general tariff level across the board and 30% on Chinese imports. While that structure has become the new baseline, there are key deadlines ahead. For example, the July 9 expiration of certain exemptions, which could reset investor expectations and global supply chain dynamics.
He noted the deep entwinement of global investing and geopolitics, referencing ripple effects from NATO defense demands, U.S.-China tensions, and fragmented trade negotiations. These macro developments could either disrupt or accelerate investor interest in non-U.S. markets, depending on how they evolve.
“All of this is interconnected,” he said. He suggested that political developments could either dampen or accelerate global investment opportunities depending on how trade and defense align.
Japan & Emerging Markets Stand Out
When the session polled participants about regions of interest for the second half of the year, responses were nearly split between U.S. and emerging markets. Japan trailed in the results. But both panelists viewed that as a contrarian opportunity.
Japan has seen significant progress in corporate governance, with rising dividends and buybacks. Schwartz highlighted Warren Buffett’s investment in Japanese trading firms as a key signal. He announced that WisdomTree is launching a Japan Opportunities ETF that emphasizes these companies. The firm already offers the $3.4 billion WisdomTree Japan Hedged Equity Fund (DXJ ) and the nearly $80 million WisdomTree Japan Hedged SmallCap Equity Fund (DXJS ).
The panel also spotlighted emerging markets. Wasatch’s Powers noted that the asset class has underperformed for years. However, it now benefits from favorable currency trends, stimulus efforts, and low valuations. He also highlighted the potential of locally oriented developed market companies, which are less exposed to trade friction.
Managing Currency Risk in a Global Portfolio
Currency exposure remains a major factor in international investing.
Next Murphy turned the conversation to the currency aspect. She noted that this often overlooked factor is increasingly consequential in a globally connected market. Schwartz cautioned that many investors unknowingly double down on risk by remaining unhedged.
“I’ve often described that currency is a bet,” he said. “You know, sometimes the bet pays off. Sometimes it doesn’t pay off.” Additionally, he pointed out that a weak dollar may help earnings today, but could shift quickly.
Schwartz also discussed how many investors lack sufficient strong-dollar exposure in their portfolios and often underestimate how currency movements affect returns. Powers echoed this view, stating that while Wasatch doesn’t forecast currencies, they aim to stay diversified and focus on fundamentals.
WisdomTree Funds Target Global Opportunity
The conversation concluded with both firms presenting strategies for navigating the second half of the year.
Schwartz emphasizes that India and Japan remain WisdomTree’s top long-term international ideas, representing complementary growth and value opportunities.
Schwartz highlighted two WisdomTree ETFs designed to capitalize on global shifts: the WisdomTree European Opportunities Fund (OPPE) and the WisdomTree India Earnings Fund (EPI ). OPPE focuses on high shareholder yield and macro exposure to NATO defense and fiscal transformation across Europe. He noted that the fund offers exposure to companies well-positioned for geopolitical change. It is currently trading at a discount relative to global markets.
Additionally, EPI’s core strategy focuses on managing valuation risk while capturing India’s structural growth.
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