 | Kate Schapiro
Lead Portfolio Manager
Sentinel International Equity Fund For the last 50 years or so, most have looked to the U.S. as the primary engine
of the world's economy, fueled largely by the U.S. consumer. But today, there is
an important shift going on affecting global economic growth and investment
opportunities. Consider the so-called BRIC countries: Brazil, Russia, India and
China, and their rise in economic size and geo-political stature in the last few
years. The last decade saw the European Union emerge as a major trading
bloc that rivals the economic size and population of the U.S. And the role of
developing economies, collectively, has gained in importance. These trends are
all part of a global rebalancing process-one with significant implications for
the 21st century investor. Read more
Executive Summary
Key Global Trends at a Glance
- In terms of global economic expansion and stock market capitalization, this decade has brought significant growth to emerging markets at the expense of the two largest economies - the U.S. and Japan.
- We expect the U.S. to remain dominant for many years to come, but de-leveraging and slower growth could have some long-term implications for the dollar and U.S. financial markets.
- China, which could see 8+% GDP growth this year, is poised to emerge from the recent slowdown with stronger, more globally competitive companies and a greater focus on its domestic expansion.
- We view the "Chimerica" relationship as symbiotic, and expect this to continue for many years to come.
Broad Investment Implications
- Returns from foreign markets have outpaced the U.S. stock market return so far this decade. Continuation of global rebalancing trends suggest that U.S. investors allocate more assets to non-U.S. markets, while non-U.S. investors should invest less in the U.S.
- China appears to be leading the recent global stock market recovery. For equity investors, we should focus investments on three areas: Infrastructure, agriculture and domestic consumption.
- The U.S. and China will remain the two most critical economies to global economic growth for the foreseeable future.
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