Investment trust insider on BlackRock Frontiers – James Carthew: Keep an eye on BlackRock Frontiers as the rest of the world wakes up
It’s worth looking around for future sources of outperformance as US assets and the dollar start to falter.
For many years now, UK investors have been switching into US or global index tracking funds, and for many years, this was the right thing to do. 2025 seems to have changed all that. Finally, we are seeing signs of life in long-neglected parts of the market. If money starts to flow the other way, this trend of underperformance by US and global trackers could persist for some time. The vast sums involved mean that even small switches out of US assets can drive substantial reratings of smaller markets.
The big pullback and subsequent recovery in US markets means that the S&P500 is now up 10.4% over the year to date (in US dollars to close of play on Wednesday 27 August). A weaker US dollar pushes the return for UK investors down to just 3.1%. Such is the dominance of US markets on global indices – the US was 65% of the MSCI All Countries World Index, the MSCI ACWI, at the end of July 2025 – that despite some very decent returns in other parts of the world, the sterling return on the MSCI ACWI has been just 6.1%.
Very few markets have underperformed the US over 2025. Most high profile of these is India (down 8.1%), which like the USA was looking fairly expensive.
By contrast, Europe ex-UK (+16.1%) and UK large cap (+16.4%) have done well, and a decent bounce in the Chinese market (+20.0%) has dragged up the returns of emerging market (+11.1%) and Asian indices…. read more here