$44 Billion Super Fund Takes Short Position on US Stocks While Favoring European Equities
New Zealand Super Fund's Investment Strategy
Contrarian Stance on U.S. Equities: The New Zealand Super Fund, valued at $44 billion and recognized as the world's top-performing sovereign wealth fund, is shifting its investment focus away from U.S. equities, which it deems overpriced. The fund's investment chiefs believe that American stocks are due for a decline, while European stocks present a more attractive opportunity.
Current Portfolio Allocation: The fund is currently 2% overweight in European equities and 3.5% underweight in U.S. stocks. This allocation reflects a strategic decision based on valuation metrics, with the S&P 500 trading at approximately 27.5 times earnings compared to the Stoxx Europe 600's 16 times earnings.
European Market Outlook
Valuation Insights: Fund managers assert that European shares are undervalued, while U.S. companies are experiencing an unsustainable premium. This perspective is supported by their recent strategy of being short on U.S. equities and long on European equities, indicating a long-term view on market dynamics.
Investment Vehicles for European Exposure: The fund is utilizing various ETFs to gain exposure to European equities, including the Vanguard FTSE European ETF (VGK), Xtrackers MSCI EAFE Hedged Equity ETF (DBEF), and iShares MSCI Eurozone ETF (EZU).
Performance Context
Historical Performance Comparison: Despite the NZ Super Fund's contrarian approach, U.S. markets have outperformed European markets significantly over the past decade, with the S&P 500 returning over 310% compared to the Stoxx Europe 600's 115%.
Long-Term Risk Assessment: The fund's leadership emphasizes that future risks are skewed against U.S. equities due to inflation pressures and a prolonged high-interest rate environment. They maintain that short-term market noise, such as tariff threats, should not distract long-term investors.
Fund Management Strategy
- Agile Investment Approach: The NZ Super Fund employs a "total portfolio" strategy, allowing for rapid capital shifts across asset classes. This flexibility has been crucial in maintaining its competitive edge and achieving an average annual return of over 10% since its inception in 2003, the highest among sovereign wealth funds.
Trade with 70% Backtested Accuracy
Analyst Views on SPY
No data
About the author
El-Erian Describes Recent Fed Communications as 'Confused' and Supports a More Reserved Approach Under Kevin Warsh's Leadership
Fed's Current Challenges: Former Fed Governor Kevin Warsh highlighted that the Federal Reserve's current issues are largely self-inflicted and emphasized the need for the central bank to realign its policies effectively.
Communication Critique: Warsh criticized the Fed's messaging as increasingly ineffective, suggesting that it has contributed to market volatility and confusion among investors.
Shift in Leadership: Economist Mohamed El-Erian noted that Warsh's potential nomination as Fed Chair could bring a much-needed independent perspective to the central bank, which has been lacking in recent years.
Market Reactions: Following these discussions, U.S. equities showed gains, indicating a positive market response to the potential changes in Fed leadership and policy direction.
Futures for Dow, S&P 500, and Nasdaq Decline Amid Tech Selloff and Disappointing Jobs Report: Key Stocks to Watch Today Include MSTR, AMZN, IREN, HIMS, and MOH
Amazon's Investment Plans: Amazon.com announced plans to spend $200 billion this year on data centers, ships, and equipment, while Alphabet Inc. projected capital expenditures of up to $185 billion for 2026.
US Labor Market Concerns: Recent US labor data showed the lowest job openings since 2020 and the highest job cuts in January since 2009, raising concerns about economic stability.
Stock Market Trends: The US stock futures declined, with significant selling pressure in technology shares, leading to a notable drop in major indices like the Nasdaq and S&P 500.
Market Reactions to Earnings Reports: Companies like Amazon and others faced sharp declines in share prices following disappointing earnings reports, highlighting investor concerns over future profitability and market conditions.
Bessent: Trump Must Decide Whether to Sue Fed Chair Nominee Kevin Warsh Over Rate Cuts
Iranian Leadership's Financial Practices: U.S. Treasury Secretary Scott Bessent highlighted that Iranian leaders are rapidly transferring money out of the country, indicating they may be aware of an impending end to their regime.
Banking Crisis in Iran: The Iranian Ayandeh Bank collapsed last year after incurring nearly $5 billion in losses, leading to significant inflation and a devaluation of the Iranian currency, which has resulted in public unrest.
U.S. Sanctions on Russia: Bessent mentioned the possibility of sanctioning Russia's shadow fleet of oil tankers, depending on the outcomes of peace talks with the country, reflecting ongoing geopolitical tensions.
Market Reactions: U.S. equities experienced declines, with major ETFs tracking the S&P 500 and other indices showing negative performance, indicating a bearish sentiment in the market.
US Layoffs Reach Highest Level Since 2009 in January, While Hiring Hits Record Low
Job Cuts and Layoffs: In January, U.S. employers announced 108,435 job cuts, the highest for the month since 2009, with significant layoffs in the transportation and technology sectors, including Amazon's announcement of 16,000 job cuts.
Hiring Plans: Employers also announced 5,306 hiring plans in January, marking the lowest total for the month since Challenger began tracking in 2009, indicating a cautious outlook for future employment.
Sector-Specific Trends: The transportation industry saw the most job cuts with 31,243 layoffs, while the technology sector followed with 22,291 layoffs, reflecting broader trends in workforce reductions across various industries.
Economic Outlook: Analysts expect a continued decline in job creation, with private employers adding only 398,000 jobs in 2025, down from 771,000 in 2024, suggesting a challenging economic environment ahead.
Trump Declares 'Excellent' Call with Chinese President Xi Jinping, Plans Trip to China in April
Trump's Discussion with Xi: President Trump reported having a productive conversation with Chinese President Xi Jinping, covering various geopolitical issues including Taiwan, the Russia-Ukraine war, and the situation in Iran.
China's Economic Activities: Trump highlighted China's increasing purchases of U.S. energy and soybean exports, noting a rise from 20 million to 25 million tons for the upcoming season.
Taiwan's Status: The Chinese government reiterated its stance that Taiwan is an integral part of China and will not be allowed to separate, emphasizing the importance of U.S. arms sales to Taiwan.
U.S.-China Relations: Both leaders acknowledged the significance of maintaining a strong relationship between the U.S. and China, with Trump expressing optimism about future positive outcomes from their interactions.
Dow and S&P 500 Futures Hold Steady Amid Tech Sell-Off and Iran Tensions: Key Stocks to Watch Today Include SMCI, AMD, NVDA, NVO, and PYPL
Market Trends: Dow and S&P futures edged higher while Nasdaq futures lagged after a tech-led sell-off, with technology stocks experiencing significant losses, particularly in major software and semiconductor companies.
Geopolitical Focus: Geopolitical tensions and data are in focus, with rising oil prices amid concerns over military actions in the Middle East, including the U.S. military's engagement with Iranian forces.
Stock Performance: Major tech stocks like Nvidia and Microsoft fell over 2%, while retail sentiment towards the S&P 500 ETF was bearish. Chipotle shares dropped nearly 6% after reporting declining traffic and flat sales growth guidance.
Upcoming Economic Data: Traders are anticipating key economic indicators, including ADP employment data and service sector PMIs, with earnings reports from major companies like Alphabet and Amazon expected soon.
El-Erian Describes Recent Fed Communications as 'Confused' and Supports a More Reserved Approach Under Kevin Warsh's Leadership
Fed's Current Challenges: Former Fed Governor Kevin Warsh highlighted that the Federal Reserve's current issues are largely self-inflicted and emphasized the need for the central bank to realign its policies effectively.
Communication Critique: Warsh criticized the Fed's messaging as increasingly ineffective, suggesting that it has contributed to market volatility and confusion among investors.
Shift in Leadership: Economist Mohamed El-Erian noted that Warsh's potential nomination as Fed Chair could bring a much-needed independent perspective to the central bank, which has been lacking in recent years.
Market Reactions: Following these discussions, U.S. equities showed gains, indicating a positive market response to the potential changes in Fed leadership and policy direction.
Futures for Dow, S&P 500, and Nasdaq Decline Amid Tech Selloff and Disappointing Jobs Report: Key Stocks to Watch Today Include MSTR, AMZN, IREN, HIMS, and MOH
Amazon's Investment Plans: Amazon.com announced plans to spend $200 billion this year on data centers, ships, and equipment, while Alphabet Inc. projected capital expenditures of up to $185 billion for 2026.
US Labor Market Concerns: Recent US labor data showed the lowest job openings since 2020 and the highest job cuts in January since 2009, raising concerns about economic stability.
Stock Market Trends: The US stock futures declined, with significant selling pressure in technology shares, leading to a notable drop in major indices like the Nasdaq and S&P 500.
Market Reactions to Earnings Reports: Companies like Amazon and others faced sharp declines in share prices following disappointing earnings reports, highlighting investor concerns over future profitability and market conditions.
Bessent: Trump Must Decide Whether to Sue Fed Chair Nominee Kevin Warsh Over Rate Cuts
Iranian Leadership's Financial Practices: U.S. Treasury Secretary Scott Bessent highlighted that Iranian leaders are rapidly transferring money out of the country, indicating they may be aware of an impending end to their regime.
Banking Crisis in Iran: The Iranian Ayandeh Bank collapsed last year after incurring nearly $5 billion in losses, leading to significant inflation and a devaluation of the Iranian currency, which has resulted in public unrest.
U.S. Sanctions on Russia: Bessent mentioned the possibility of sanctioning Russia's shadow fleet of oil tankers, depending on the outcomes of peace talks with the country, reflecting ongoing geopolitical tensions.
Market Reactions: U.S. equities experienced declines, with major ETFs tracking the S&P 500 and other indices showing negative performance, indicating a bearish sentiment in the market.
US Layoffs Reach Highest Level Since 2009 in January, While Hiring Hits Record Low
Job Cuts and Layoffs: In January, U.S. employers announced 108,435 job cuts, the highest for the month since 2009, with significant layoffs in the transportation and technology sectors, including Amazon's announcement of 16,000 job cuts.
Hiring Plans: Employers also announced 5,306 hiring plans in January, marking the lowest total for the month since Challenger began tracking in 2009, indicating a cautious outlook for future employment.
Sector-Specific Trends: The transportation industry saw the most job cuts with 31,243 layoffs, while the technology sector followed with 22,291 layoffs, reflecting broader trends in workforce reductions across various industries.
Economic Outlook: Analysts expect a continued decline in job creation, with private employers adding only 398,000 jobs in 2025, down from 771,000 in 2024, suggesting a challenging economic environment ahead.
Trump Declares 'Excellent' Call with Chinese President Xi Jinping, Plans Trip to China in April
Trump's Discussion with Xi: President Trump reported having a productive conversation with Chinese President Xi Jinping, covering various geopolitical issues including Taiwan, the Russia-Ukraine war, and the situation in Iran.
China's Economic Activities: Trump highlighted China's increasing purchases of U.S. energy and soybean exports, noting a rise from 20 million to 25 million tons for the upcoming season.
Taiwan's Status: The Chinese government reiterated its stance that Taiwan is an integral part of China and will not be allowed to separate, emphasizing the importance of U.S. arms sales to Taiwan.
U.S.-China Relations: Both leaders acknowledged the significance of maintaining a strong relationship between the U.S. and China, with Trump expressing optimism about future positive outcomes from their interactions.
Dow and S&P 500 Futures Hold Steady Amid Tech Sell-Off and Iran Tensions: Key Stocks to Watch Today Include SMCI, AMD, NVDA, NVO, and PYPL
Market Trends: Dow and S&P futures edged higher while Nasdaq futures lagged after a tech-led sell-off, with technology stocks experiencing significant losses, particularly in major software and semiconductor companies.
Geopolitical Focus: Geopolitical tensions and data are in focus, with rising oil prices amid concerns over military actions in the Middle East, including the U.S. military's engagement with Iranian forces.
Stock Performance: Major tech stocks like Nvidia and Microsoft fell over 2%, while retail sentiment towards the S&P 500 ETF was bearish. Chipotle shares dropped nearly 6% after reporting declining traffic and flat sales growth guidance.
Upcoming Economic Data: Traders are anticipating key economic indicators, including ADP employment data and service sector PMIs, with earnings reports from major companies like Alphabet and Amazon expected soon.
