Goldman Sachs strategists urge investors to diversify away from US assets

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Goldman Sachs’ global strategy team believes that, at present, US assets are no longer superior, calling investors to further diversify to achieve returns.

Goldman first suggested this “diversify to amplify” approach back in October 2024, when valuation spreads between the winners and losers of the 15 years following the 2008 global financial crisis hit record peaks — so did stock concentration, especially among mega-cap tech players.

However, since the start of 2025, a more resilient Chinese economy and a major change in German fiscal policy with the release of the “debt brake” began to lure investors to cheaper markets overseas.

The burgeoning US deficit and US policy uncertainty, particularly in terms of trade, foreign affairs and fiscal policies, raised the risk premium on the US dollar. The American currency witnessed so far 10% depreciation this year, meaning foreign exchange has become a key driver of multi-asset portfolio risk.

Goldman’s forex strategists anticipated further downward adjustment for the US dollar as the net upshot of tariff hikes begin reflecting on the corporate profits alongside the real incomes of US households that drove dollar strength in the first place.

Goldman also noted that there have been tentative signs of investors broadening their geographical and sectoral exposure but that the concentration risk remains elevated in global portfolios. A normalization of interest rates worldwide seems to have cushioned the growth-versus-value bifurcation.

Consequently, classic value sectors like European banks have started to perform strongly alongside classic growth stocks such as the Magnificent Seven.

In the rest of the world, small- and mid-caps have started to outperform. The recommendation, then, according to Goldman, is that investors ought not to extrapolate trends that have been in place since the global financial crisis indefinitely given the ever-evolving trends.