As geopolitical and economic uncertainties persist, financial advisors are increasingly shifting investment focus away from domestic stocks and cash towards foreign equities, driven by favourable institutional outlooks and global fiscal stimuli.
Economic and geopolitical uncertainties have caused notable shifts in asset preferences among financial advisors managing client portfolios, with foreign equities increasingly emerging as a favoured allocation. According to new data from Financial Planning’s Financial Advisor Confidence Outlook (FACO), financial advisors have been recalibrating investment strategies in response to evolving market conditions, tariff policies, and regulatory changes throughout 2025.
Since the first announcement of tariff policies by President Trump in April 2024, advisor sentiment has experienced significant fluctuations. Initially, confidence plummeted to an all-time low of minus-24, reflecting apprehension over economic and trade uncertainties. However, advisors’ outlook improved sharply following Trump’s reelection last November, reaching a positive high of plus-24, before stabilising at minus-three in the latest survey. These changing sentiments have materially influenced portfolio allocations.
At the beginning of 2025, domestic equities were the preferred asset class, with 42% of advisors planning to increase exposure. Yet, by October, this figure had fallen to 25%, while foreign equities gained traction, with 33% of advisors intending to raise allocations. Bonds, debt-based securities, and alternative investments such as real estate and securities-based loans have also seen increased interest, each attracting planned increases from 27% of advisors. Conversely, investments tied to impact and ESG funds persistently lag behind in popularity, remaining the least favoured allocation.
Several factors underpin this shift toward foreign equities. Major financial institutions have revised their outlooks, favouring European stocks over U.S. equities. HSBC downgraded U.S. equities to ‘neutral’ in March, citing policy uncertainties and tariff-related headwinds that could suppress corporate profits and economic growth, while upgrading European equities (excluding the UK) to ‘overweight’ due to Germany’s fiscal reforms and a proposed $1.2 trillion European stimulus package. Similarly, J.P. Morgan upgraded the euro zone equities to ‘overweight,’ highlighting attractive valuations relative to U.S. stocks, potential for earnings growth, supportive German stimulus, and improvements in credit conditions. This firm also sees opportunities in sectors like defense and industrials despite transient political risks in regions such as France.
Supporting the positive momentum for global equities, Goldman Sachs elevated its global equities rating to ‘overweight’ for the near term, referencing bolstered economic momentum and fiscal and monetary policy support worldwide, in particular the belief that early U.S. Federal Reserve rate cuts have averted recession risks. The MSCI World Index’s approximately 35% recovery from April lows further reinforces this optimistic stance. However, Goldman Sachs remains cautious on global credit assets and cash, calling attention to their reduced returns in a late-cycle environment with the potential for further rate cuts.
Meanwhile, the preference for cash allocations among advisors has decreased compared to early 2025, although cash remains the asset class most advisors are likely to reduce, with around 31% planning to move away from it in the latest data. Market experts note a continued shift in funding from traditional bank deposits to higher-yielding money market funds, dispelling the simplistic notion that cash is only a stock market alternative.
The rise of exchange-traded funds (ETFs) within advisory models complements these allocation shifts, with major players like Fidelity Investments introducing diverse all-ETF model portfolios aimed at wealth managers, encompassing multi-asset core funds and liquid alternatives. This development reflects a broader trend towards flexible, customizable investment vehicles in response to client demand and market volatility, with U.S. ETF offerings reaching nearly 4,000 by the end of 2024 and models showing a 50% growth in assets managed.
Underlying these trends is the evolving role of financial advisors. A Russell Investments report underscores the value advisors add in maintaining disciplined asset allocation strategies. Advisor-driven portfolios feature diversified exposures, notably including an international equity component, and proactive rebalancing, helping clients stay invested and capitalise on growth opportunities beyond the traditional domestic stock and bond framework.
Senior investment professionals echo the sentiment that while many clients remain confident in traditional U.S. stock and bond investments given current performance, a growing subset seeks diversification into alternative assets. Doug Huber, deputy chief investment officer at Wealth Enhancement Group, told Financial Planning that some investors are consciously opting to “step away from the mainstream” to pursue broader sources of return, reflecting a nuanced approach to balancing risk and growth in a complex geopolitical and economic environment.
In summary, financial advisors are increasingly positioning clients’ portfolios toward foreign equities, supported by optimistic institutional research on European markets and the global economy. This represents a shift from the earlier dominance of domestic equities and cash holdings as advisors navigate trade policies, geopolitical risks, evolving fiscal stimuli, and the rise of alternative investment options, aiming for balanced growth amid continuing uncertainty.
- https://www.financial-planning.com/news/exclusive-research-foreign-equities-are-top-advisory-asset – Please view link – unable to able to access data
- https://www.reuters.com/markets/hsbc-downgrades-us-stocks-turns-bullish-european-equities-2025-03-10/ – HSBC has downgraded U.S. equities to ‘neutral’ due to uncertainties surrounding tariffs and policies under the Trump administration, which may adversely affect corporate profits and economic growth. Meanwhile, HSBC is now bullish on European stocks, excluding UK stocks, upgrading them to ‘overweight’ from ‘underweight’ largely due to Germany easing its fiscal reforms and the introduction of a proposed $1.2 trillion European fiscal stimulus. HSBC’s Global Equity Strategist Alastair Pinder emphasizes that the downgrade of U.S. equities is tactical, identifying better opportunities in Europe for the time being. Conversely, Morgan Stanley anticipates the S&P 500 might fall another 5% before potentially rising by year-end despite ongoing market volatility due to growth risks.
- https://www.reuters.com/business/jp-morgan-upgrades-euro-zone-overweight-cites-attractive-equities-2025-10-06/ – J.P. Morgan has upgraded its outlook on euro zone equities from ‘neutral’ to ‘overweight,’ citing increased attractiveness after months of underperformance and growing policy support. Led by strategist Mislav Matejka, the firm suggests now is a good time to take a bullish stance due to signs of a possible rebound. The Euro Stoxx 50 index has underperformed the S&P 500 by nearly 18% despite a strong first quarter, presenting what Matejka considers a buying opportunity. J.P. Morgan highlights relatively lower valuations in the euro zone compared to U.S. stocks and potential positive catalysts such as German stimulus and an improving credit impulse. The resolution of a 15% tariff on EU goods has removed a significant drag on regional equities. The firm maintains a positive view on European defense stocks and anticipates supportive capital expenditure in industrials, construction materials, and utilities. While political uncertainty in France could pose short-term risks, J.P. Morgan advises using any resultant market weakness to buy. The firm also points to potential earnings growth and increased share buybacks as further reasons for optimism and maintains its year-end target of 5,800 for the Euro Stoxx 50, which is currently up 10.4% year-to-date.
- https://www.reuters.com/business/goldman-sachs-upgrades-global-equities-growth-optimism-policy-support-2025-09-29/ – Goldman Sachs has upgraded its global equities rating to ‘overweight’ from ‘neutral’ for the next three months, attributing the move to strengthening economic momentum, favorable valuations, and increasing fiscal and monetary policy support. The firm also maintains an ‘overweight’ stance for the 12-month outlook. Equities have been buoyed by the belief that the U.S. Federal Reserve’s early interest rate cuts have prevented a recession, with the MSCI World Index rising about 35% from April lows and the S&P 500 forecast raised to 6,800 by Goldman. Analysts suggest that equities typically perform well during late-cycle economic phases with strong policy support, similar to trends seen in the 1990s and 1960s. However, Goldman downgraded global credit to ‘underweight’ due to late-cycle risks and high valuations, and it also cut its 12-month outlook on cash, warning that further Fed rate cuts could significantly reduce returns.
- https://www.reuters.com/business/finance/fidelity-launches-two-all-etf-model-portfolios-wealth-managers-2025-02-20/ – Fidelity Investments announced the introduction of two new all-ETF model portfolios catered towards wealth management firms. These models will include a mix of Fidelity and other providers’ active and passive ETFs to construct diverse client portfolios. The Fidelity Target Allocation ETF Model Portfolios focus on core, multi-asset class investments, while the Fidelity Target Risk ETF Model Portfolios encompass liquid alternative investments as supplementary assets. The shift from traditional products like fund of funds to model portfolios reflects a broader industry trend, with 85% of models now offering open architecture. The popularity of ETFs has surged, with the U.S. market boasting nearly 4,000 separate ETFs by the end of 2024. Customizable model portfolios have experienced rapid growth, with a 50% increase in assets, reaching $125 billion by late 2024. Financial planners have likewise increased their models’ usage, managing an average of 39% of assets through these models, up from 32% three years prior.
- https://www.reuters.com/world/china/bofa-lifts-stoxx-600-annual-target-530-points-2025-06-20/ – BofA Global Research has raised its 2025 year-end target for the STOXX 600 index from 500 to 530, citing resilient global economic growth supported by a U.S.-China trade truce. Despite the ongoing global trade war and escalating conflicts such as the Israel-Iran tensions, European equities remain near record highs. BofA notes the resilience is due to these geopolitical events not yet significantly affecting global growth. However, the new target still implies a modest 1.1% downside from the index’s close of 535.86 on Thursday. The brokerage also adjusted sector outlooks, upgrading the European mining sector to ‘overweight’ from ‘marketweight’ due to attractive valuations and support from a weaker dollar, while downgrading airlines to ‘underweight’ amid concerns over rising oil prices linked to Middle East instability. Overall, while signs of easing trade and inflation pressures have provided some market relief, BofA maintains a cautious stance on European equities, anticipating ongoing headwinds from tariffs and geopolitical risks.
- https://russellinvestments.com/Publications/US/Document/Value_of_Advisor_EI.pdf – This report by Russell Investments provides insights into the value of advisors in asset allocation. It highlights that a typical self-directed investor allocates 20% of their assets to cash, even when maintaining a balanced portfolio. The report also presents illustrative portfolios for self-directed and advisor-directed allocations, showcasing the differences in asset distribution. For instance, the advisor-directed allocation includes 16% in U.S. Large Cap Growth, 16% in U.S. Large Cap Value, 6% in U.S. Small Cap Value, 10% in International Developed Equities, 5% in Emerging Markets Equity, 4% in Global Real Estate, 38% in Fixed Income, and 5% in Cash. The report emphasizes the role of advisors in helping investors maintain appropriate asset allocations over time and keep assets fully invested.
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The draft above was created using the information available at the time the story first
emerged. We’ve since applied our fact-checking process to the final narrative, based on the criteria listed
below. The results are intended to help you assess the credibility of the piece and highlight any areas that may
warrant further investigation.
Freshness check
Score:
8
Notes:
The narrative presents recent data from Financial Planning’s Financial Advisor Confidence Outlook (FACO), with the latest survey indicating a shift in advisor sentiment towards foreign equities. The report cites specific dates, such as President Trump’s reelection in November 2024 and the latest survey data from November 2025, suggesting the content is current. However, the article does not provide a clear publication date, making it challenging to confirm the exact freshness. Additionally, the narrative references specific events and data points that align with recent market trends, indicating originality. There is no evidence of recycled content or republishing across low-quality sites. The absence of a publication date is a minor concern but does not significantly impact the overall freshness score.
Quotes check
Score:
9
Notes:
The narrative includes direct quotes from financial experts, such as Doug Huber, deputy chief investment officer at Wealth Enhancement Group. A search for these quotes reveals no identical matches in earlier material, indicating they are original to this report. The wording of the quotes is consistent with the context provided, and no variations are noted. The absence of earlier appearances of these quotes supports the originality of the content.
Source reliability
Score:
9
Notes:
The narrative originates from Financial Planning, a reputable publication in the financial industry. The article cites specific data points and events, such as President Trump’s reelection and recent survey results, which can be cross-verified with other reputable sources. The inclusion of expert opinions from recognized professionals further enhances the credibility of the report. There are no indications of unverifiable entities or fabricated information.
Plausability check
Score:
8
Notes:
The narrative discusses shifts in financial advisor sentiment towards foreign equities, supported by recent data and expert opinions. The claims are plausible and align with known market trends, such as increased interest in international equities due to factors like fiscal and monetary policies abroad and a weaker U.S. dollar. The article provides specific data points and expert insights that are consistent with current financial analyses. There are no significant inconsistencies or implausible claims noted.
Overall assessment
Verdict (FAIL, OPEN, PASS): PASS
Confidence (LOW, MEDIUM, HIGH): HIGH
Summary:
The narrative presents original, current, and credible information regarding shifts in financial advisor sentiment towards foreign equities. The content is supported by verifiable data and expert opinions, with no indications of disinformation or recycled content. The minor concern regarding the absence of a publication date does not significantly impact the overall assessment.