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(Bloomberg) — The end of the Iran war is reviving investor appetite for stocks outside the US, according to Scott Geary, the head of global wealth at Wellington Management.
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He sees investors gradually reducing outsized bets on the largest US stocks and broadening their portfolios into other areas, including Europe, Japan and US small caps. He also cited interest in Europe’s defense and industrial sectors, as well as oil and gas, as policymakers rush to bolster the region’s security and energy independence.
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“The market is seeking increased diversification,” said Geary, who spoke at the FII Priority Europe Forum in Rome organized by the Future Investment Initiative Institute.
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He added that the shift is being driven not by a bearish view on America, but rather by a growing belief that the rest of the world is becoming more attractive. Geary said some clients are starting to scale back the extreme overweight to US stocks, particularly in the Magnificent Seven.
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As part of the broadening trend, he sees scope for Europe to benefit from more artificial intelligence technology as companies in manufacturing, healthcare and finance integrate the tools into their existing businesses.
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“The US is still the default allocation,” he said, citing strong earnings growth, resilient consumers and leadership in technology. “I think the debate has shifted from ‘Is US exceptionalism over?’ to ‘How exclusive is it going forward?’”
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While Wall Street started the year bullish on the rotation theme, the S&P 500 has trounced Europe’s Stoxx 600 so far in 2026 as US big tech delivered blockbuster profits. But with oil prices tumbling, more strategists are turning bullish on Europe.
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“The biggest risk is being too concentrated in one market after a decade of US outperformance,” he said. “I’m constructive on Europe not because it replaces the US, but because diversification finally matters again.”
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