Investing in Global Size & Style strategies offers the broadest possible canvas, capturing opportunities across both domestic and international markets. However, because the U.S. represents such a massive portion of the global equity market (approx. 60-65%), the “Global” label can be deceptive.
Note: This channel focuses on funds with mandates to invest globally, meaning they hold both U.S. and International securities. If a fund excludes the U.S., it belongs in the Global Ex-U.S. channel.
To build a global portfolio that aligns with your macro assumptions, evaluation must be approached through four distinct lenses: Geography (The U.S. Split), Exposure (Structural Biases), Fundamentals (The Blended Price), and Risk & Return (Currency & Volatility).
1. Geography Analysis: The U.S. Weighting Check
In this channel, “Geography” isn’t just about which countries you own; it is primarily about how much U.S. exposure you are accepting.
Market Allocation (The “Closet U.S.” Check)
Global benchmarks are heavily skewed toward the United States. A market-cap-weighted “Global Growth” fund can easily be 70% or 80% U.S. equities.
- The Quick Check (Derived): Use the Equity – Market Assignment.
- Global vs. International: Ensure the fund is assigned Global (implying a mix of U.S. and Ex-U.S.). If it flips to U.S. (meaning >80% U.S. exposure), you are effectively buying a domestic fund with a small international “sidecar.”
- The Deep Dive (Actual): Analyze the U.S. Allocation relative to the Benchmark (e.g., MSCI ACWI).
- The Active Decision: If a manager is equal-weighting countries, the U.S. exposure might drop to 20%, creating a massive active bet against the world’s largest market. You need to know if the fund is betting on the global economy or betting against U.S. dominance.
Regional & Country Tilts
Beyond the U.S., where is the rest of the portfolio?
- The Quick Check (Derived): Check the Equity – Region Assignment.
- Red Flag: A “Global Value” fund might trigger a “Europe” assignment if the model hunts for yield in European financials, leaving you with little exposure to Asian or Emerging Markets growth.
- The Deep Dive (Actual): Check Country Over/Underweights.
- The Goal: Verify that the international portion provides actual diversification. If the non-U.S. sleeve is entirely UK and Canada, it may be highly correlated to the U.S. cycle, defeating the purpose of going global.
2. Exposure Analysis: The Great Sector Divide
In a global context, “Growth” and “Value” are often proxies for specific geographies and sectors.
The Sector Split
- The Quick Check (Derived): Use the Equity – Sector Concentration Rating. A “High” rating here is common and often signals a geographic split.
- The Deep Dive (Actual): Analyze GICS Sector Allocation.
- Global Growth = U.S. Tech: Global Growth funds are often dominated by U.S. Technology and Communication Services companies (e.g., Microsoft, NVIDIA, Alphabet).
- Global Value = International Old Economy: Global Value funds often tilt heavily toward International Financials, Materials, and Industrials.
- The Takeaway: Buying “Global Growth” often means doubling down on the U.S. Tech trade, while buying “Global Value” often means pivoting to International Cyclicals.
Concentration & Overlap
- The Quick Check (Derived): Check the Equity – Stock Concentration Rating.
- The Mag 7 Effect: Even in a “Global” fund, the massive market caps of the top U.S. companies can dominate the portfolio. A “High” concentration rating usually means the fund is top-heavy with U.S. mega-caps, regardless of how many countries it claims to cover.
- The Deep Dive (Actual): Review Top 10 Holdings.
- The Audit: If the top 10 holdings look identical to the S&P 500’s top 10, ask yourself: “Why am I paying global fees for a portfolio that is effectively the S&P 500?”
3. Fundamentals: The Blended Price
Global valuation is a “blend” of the expensive U.S. market and the discounted International market.
Valuating the “Mix”
- The Quick Check (Derived): Use Factor Ratings & Tilts (Scale 0-5). Benchmarked against the Global (MSCI ACWI IMI) universe, these ratings naturally account for the U.S. premium.
- Example: A Global fund with a “Value Tilt Rating” of “3 (Average)” might still look cheap compared to a pure U.S. fund, but expensive compared to a pure Emerging Markets fund.
- The Deep Dive (Actual): Compare Valuation Ratios (P/E, P/B) against the Benchmark.
- The Interpretation: A lower P/E than the benchmark might not mean the manager picked cheap stocks; it might just mean they underweight the U.S. (which trades at a premium). Always check if the “value” comes from stock selection or just from having less U.S. exposure.
Quality & Financial Health
- The Quick Check (Derived): Look at the Quality Tilt Rating. U.S. companies generally have higher ROE than their international peers.
- The Pattern: Global funds with higher U.S. allocations often score higher on Quality metrics. If a Global fund has a Low Quality rating, it likely has a heavy tilt toward International Value or Emerging Markets.
4. Risk & Return: Diluted Currency Risk
Investing globally involves currency risk, but less so than pure international funds because the U.S. dollar portion acts as a buffer.
Currency Impact
- The Consideration: Analyze the Non-U.S. Exposure %.
- The Logic: If a fund is 65% U.S., only 35% of the portfolio is exposed to foreign currency fluctuations. This makes Global funds naturally less sensitive to the Dollar’s moves than Global Ex-U.S. funds, but the risk is still present.
Behavioral Checks
- The Metric: Always measure relative to the Global Benchmark (e.g., MSCI ACWI).
- The Trap: Do not compare a Global fund to the S&P 500. If the U.S. outperforms the world (as it has in recent cycles), every Global fund will “underperform” the S&P 500 simply because it owns international stocks. That is a feature of diversification, not a bug in the strategy.
5. Advanced Application: Multi-Factor Nuance
Finding the “best” global fund often requires solving for the specific biases of the global market structure.
The “And” Query: Balancing the Map
- The Use Case (Global Value): Global Value can be overly concentrated in low-growth European banks.
- The Strategy: Filter for Equity – Style Assignment = Value, then sort by Growth Tilt Rating (High to Low).
- The Goal: Find global value funds that aren’t just yield traps, but own companies (perhaps in the U.S. or EM) that are actually growing earnings.
- The Use Case (Global Quality): Global Quality can unintentionally become a “Closet U.S.” fund due to high U.S. ROE.
- The Strategy: Filter for Equity – Style Assignment = Core or Growth, then check the U.S. Allocation.
- The Goal: Find a Quality strategy that maintains genuine international diversification rather than just buying the S&P 500 aristocrats.
6. Popping the Hood: Single Stock Granularity
Aggregate data masks the true source of revenue. In a globalized economy, “Domicile” doesn’t always equal “Exposure.”
- The Revenue Reality Check: A company might be listed in the U.S. (like Coca-Cola) but derive substantial revenue globally. Conversely, a company might be listed in Europe (like Novo Nordisk) but sell heavily to the U.S.
- The “Where do they sell?” Check: Use the company-level research to understand if the portfolio is truly economically diversified, regardless of where the stocks are listed.
- The Top 10 Audit:
- The “Mag 7” Check: Confirm exactly how much of the fund is allocated to the U.S. mega-caps. If you already own an S&P 500 fund, you might prefer a Global fund that caps single-stock weights to avoid redundancy.
Beyond the Primer: Institutional-Grade Data & Support
This primer provides a guide for evaluating Global Size & Style strategies, but the ETF Action platform offers far deeper capabilities.
- Powered by FactSet: Our platform leverages global institutional data, ensuring that your analysis of a Global fund accurately captures the nuances of both New York and Tokyo listings.
- We Are Your Resource: Navigating global allocations is complex. The ETF Action team is available to demo how to set up these specific geographic and factor screens to align with your global macro views.