By Darius McDermott, managing director FundCalibre
”Life moves pretty fast”, was Ferris Bueller’s famous excuse for truancy. It is advice that investors also have to bear in mind as they try to shape their portfolios for an increasingly unpredictable future. While any attempt at crystal-ball gazing comes with risks, there are a few themes that should have longevity even in a disrupted world.
It seems clear the role of the US is changing. Even if the current administration is replaced by a more internationally friendly option next time, the world cannot unsee how the US has used its economic might to pursue its own agenda at the expense of decades-old alliances. Reliance on US technology and defence systems is a risk that governments haven’t previously had to contemplate.
The implications of this shift are far reaching. Capital Group says: “The US has long defied conventional economic wisdom by sustaining persistent fiscal and trade deficits without triggering a dramatic sell-off in government bonds or a collapse in its currency. This resilience is rooted in the unique position of the US dollar as the world’s dominant reserve currency, which allows the US to borrow at lower costs and attract global capital even as debt levels rise.”
Geopolitical fragmentation, technological disruption, loss of institutional credibility, and persistent fiscal recklessness could all undermine this unique position.
In the longer term, this may also threaten US dominance of global stockmarkets. The US share of global GDP has been declining over time and is forecast to decline further – to around 13% of global GDP by 2031*. At each point, the US share of global stock markets starts to look more anomalous, with the US making up 72% of the MSCI World index**.
Who might win if there is a realignment?
Steve Watson, manager on the Capital Group New Perspective fund, says: “Stocks in the rest-of-world are still trading at a sizeable price-to-earnings discount relative to the S&P 500. Emerging markets are trading at a roughly 40% discount.”
Yet many of these companies are global leaders. Watson highlights China-based Tencent, the largest gaming company in the world, and Taiwan Semiconductor Manufacturing Company, the largest computer chip maker in the world.
See also: The case for global equity income in volatile markets
Countries such as India and China should be natural beneficiaries of a world where there is less trust in the US. As Prashant Khemka, manager on the Ashoka Investment Trust, puts it: “It is perhaps easy to overlook the fact that India is the world’s fourth-largest economy but it is hard to imagine world economic growth over the next decade and beyond without India having a major role to play.”
Jonathan Pines, manager on the Federated Hermes Asia ex Japan Equity fund, has identified a range of long-term emerging market beneficiaries from a changing global order. These include leading Chinese battery company CATL, which manufactures EV batteries for passenger and commercial vehicles and for energy storage batteries and BYD, the world’s largest manufacturer of EVs, and the second-largest battery maker.
The battle for resources
These choices hint at another long-term theme – the battle for resources, and energy in particular. Energy crises are getting closer together. There is a realisation that most other areas of progress – AI, for example – are dependent on reliable sources of cheap energy. China has been ahead of the game in recognising that sustained economic growth is dependent on energy resilience, but many countries are scrambling to keep up.
While renewable energy has been a difficult place to invest, infrastructure funds have broader exposure and are in a prime position to benefit from these trends. For example, M&G Global Listed Infrastructure fund is focused on economic infrastructure, such as utilities and energy companies, plus social infrastructure in areas like health and education, and evolving infrastructure such as mobile towers and data centres.
See also: Hunting for growth after the AI trade
This theme is also found across many emerging market portfolios. For example, Pines has a holding in Nari Tech in China. “It is the largest supplier of secondary grid equipment – such as dispatch systems, control systems, monitoring systems, grid software, relay protection systems – to the power grid in China. The Beijing government recently announced a huge increase in grid investment as part of its latest five-year plan.”
Innovation
No consideration of long-term themes is complete without a look at technology. Undoubtedly, technology will continue to infiltrate more of our lives, and AI may deliver the revolution that it promises, for good or bad. However, it remains difficult to predict the outcomes of technological innovation with any certainty, as the recent rout in the software sector has shown.
The team on the GQG Partners Global Equity fund says: “Ask a group of people to compare the perceived value of ChatGPT to auto insurance. While most people pay for and would pay more for auto insurance—even if rates increase or they lose their job—very few pay for ChatGPT, and far fewer would pay more if its price went up.”
This is the problem with backing a single technological theme. Yes, technology has brought about significant change – from biotechnology, cloud computing, to robotics and AI. It has brought about disruption in areas such as finance, auto makers, and in all our workplaces. However, pinpointing the winners and losers is tough.
Rather than picking a single innovation theme, we would say that isolating individual themes is best left to the experts. Funds such as AXA Framlington Global Technology, Guinness Global Innovators or WS Amati Global Innovation have a lengthy track record of backing the disruptors and shunning the disrupted. Life moves pretty fast and investors need someone who can keep pace.
Sources: * Statista Research Department, 5 May, 2026
** Index factsheet, 30 April, 2026
