In GMO’s 3Q 2025 Quarterly Letter, Ben Inker and John Pease deconstruct 15 years of S&P 500 outperformance versus global peers, highlighting its narrow drivers and questioning its sustainability.
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Roughly 80% of U.S. equity outperformance stemmed from dollar strength and valuation expansion—factors unlikely to repeat.
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Fundamental gains were concentrated in the “Magnificent Six,” while the median S&P 500 company delivered historically weak growth.
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International equities now trade at a 30–50% discount, with improving fundamentals and potential FX tailwinds.
Could regional diversification finally tilt in favor of non-U.S. equities? Explore the full letter for insights.
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