Despite the apparent anomaly, most portfolios held European-domiciled large-caps with notable emerging markets exposure rather than domestically exposed stocks – such as Nestlé and Unilever. This continues a trend S&P Capital IQ observed in 2011.
An extreme example of this is the S&P Capital IQ Platinum graded Rouvier Valeurs, which had 84% of its concentrated portfolio in Continental Europe (71% in France). While this to some degree reflected the natural knowledge bias of the team, the holdings principally comprised globally diverse companies offering good growth but trading at a discount to intrinsic value that just happen to be domiciled in France.
Few funds were overweight the US, which is unsurprising given its weight in the indices (48% of the MSCI ACWI and 60% of the MSCI World). Only seven funds had more than 55% in the US, but the sector averaged 40% exposure, reflecting the fact that some of the world's largest IT names are domiciled in the US.
The performance of the IT sector helped the S&P 500 to achieve a small positive return over the 12 months to the end of June 2012, a feat few countries were able to emulate. The six funds with a US weighting below 20% tended to be more value-oriented in their approach and both groups viewed the sector and the US market as overvalued. S&P Capital IQ Silver graded BL Equities Dividend, for example, with its defined relative value approach, had just 6% in the US.
