Less US Is a Good Thing

It is reassuring that professional investors are reducing their strong overbalance in the U.S. Private investors could learn from them.

The sign coming from the new investment allocation of the world’s most successful fund managers is clear. They are reducing their overbalance in U.S. stocks, according to a survey by the industry analyst Citywire. That is a good thing. Of course, active managers want to achieve excess returns. Investors buy such products for precisely that reason, after all. But strong U.S. dominance, record prices or not, is not healthy for investors who want to diversify their wealth.

For one, the professionals’ clear redeployment toward India shows private investors the possible source of future growth. But it also makes another important thing clear: Lump sum investments, such as those made in U.S. technology funds, are dangerous in the long run. Those who cast a broad net reduce risk. Every boom ends at some point.

However, the fact that German companies rank quite low on the top investors’ favorability ratings is sobering. At least there are now 12 instead of 10 among the favored German corporations, thanks to the Deutsche Börse Group and the Munich Re Group.