After a decade dominated by a small group of U.S. mega-caps, signs point to a shift. In this Q&A, Miguel discusses the maturing drivers of U.S. outperformance, the reform momentum building across key international markets, and the diverse set of bottom-up opportunities emerging across the global equity universe.
Q1: How did U.S. dominance and market concentration develop, and what does it mean for today’s market?
Miguel: The United States has genuinely earned its outperformance over the past 15 years. Companies delivered stronger earnings growth, higher returns on capital and better business-model execution than most international peers. Investors rewarded that with higher valuations. At the same time, a handful of U.S. mega-caps became so successful that they created a kind of vacuum cleaner effect, pulling global capital into an increasingly narrow part of the market.
This has had consequences. Many sectors and much of the international universe have been deprived of capital. U.S. mid- and small-cap companies have also been overlooked despite strong fundamentals. And today we are seeing the first signs that the forces behind U.S. exceptionalism are beginning to mature, just as attractive developments gather pace outside the United States.
Q2: What changes are we seeing internationally in company behaviour and policymaking?
Miguel: International companies have been learning from the U.S. playbook. We are seeing the adoption of cloud efficiencies, e-commerce logistics, digital advertising stacks, subscription models and data-driven pricing. These are the tools that helped U.S. companies scale so effectively, and management teams around the world now recognise that they must keep up with U.S. firms that are expanding globally.
We are also seeing a major shift in capital discipline. Many non-U.S. companies have refocused on their strongest business lines, stepped away from low-return segments and become far more rigorous in how they allocate capital because investors will no longer tolerate inefficient models.
Policymakers are reinforcing this. Japan’s corporate governance reforms are gaining traction. Korea’s Value Up programme is encouraging companies to prioritise returns. The United Kingdom has adopted a more pro-business tone. Germany and France are increasingly focused on reducing bureaucratic friction in order to support competitiveness. These developments resemble the kind of structural reform cycle that supported U.S. corporate leadership for many years, and they are only now beginning to take hold internationally.
Q3: Where does this leave the opportunity set for global equity investors?
Miguel: The opportunity set is far more interesting than it has been for some time. International markets are trading well below their historical relative valuations to the U.S., even as fundamentals improve and reform momentum builds. This valuation gap creates meaningful opportunity.
At the same time, the concentration in U.S. mega-caps has left a wide range of mid- and small-cap companies undervalued and under-owned. Many of these businesses have strong balance sheets, durable competitive positions and long runways for growth, yet they have been overshadowed by the mega-cap narrative.
As a result, global investors face a twofold opportunity. First, in international markets where improving quality meets attractive valuations and policy support. Second, within the United States itself where overlooked mid- and small-cap companies are offering compelling bottom-up value.
For global generalists like us, widening dispersion and a more level global playing field creates one of the most attractive hunting grounds we have seen in many years.
Q4: Is the market overestimating the value of AI enablers?
Miguel: There is a real risk that the market’s enthusiasm for artificial intelligence is too narrowly focused. Much of the attention is directed toward a small group of companies that enable AI, particularly the large hardware and semiconductor names. These businesses have been very successful and are critical to the ecosystem, but their valuations increasingly reflect very high expectations.
From our perspective as global generalists, the more interesting question is not only who supplies AI, but where AI’s long term economic value will actually accrue. The market tends to assume that the enablers will capture most of the benefit, yet history shows that the downstream users of transformational technologies often see more durable improvements in returns. That is where we believe the market may be overestimating one side of the equation and underestimating the other.
Q5: Is the market underestimating the value of AI users, particularly in traditional sectors?
Miguel: Yes, and this is where we see some of the most compelling opportunities. We focus heavily on inference, which refers to how AI is deployed inside real businesses. This is where efficiency gains, margin expansion and return improvements actually appear.
Consider banks, telecom operators, insurers or business services firms. These companies have large workforces and complex operations. If AI allows them to streamline processes, automate tasks and improve customer service, the impact on profitability could be significant. Yet the market does not price them as AI beneficiaries.
We do hold selective exposure to critical hardware suppliers such as TSMC and Samsung, but the more interesting opportunities are often the companies that stand to benefit most from AI while still trading at traditional valuations. A good example is a global leader in outsourcing for Fortune 500 clients. The cost savings and productivity gains enabled by AI could be substantial, but the market continues to view it as a conventional services provider.
In short, many traditional companies may see meaningful performance uplifts from AI adoption, and these potential benefits remain underappreciated. This second layer of AI exposure is an area where we believe the market has not yet caught up with the underlying fundamentals.
Q6: What other opportunities has the Global Opportunities strategy been exploring recently?
Miguel: We continue to identify attractive themes across several areas of the market. In retail and e-commerce, many businesses are improving operational discipline, strengthening balance sheets and making better use of data, which supports more sustainable growth. In financials, select banks are benefiting from technology adoption, consolidation and improved capital allocation.
We also see compelling potential in government outsourcing, where long duration contracts and rising demand for efficiency can create stable, recurring revenue streams. These areas share a common pattern. Companies are becoming more focused, more disciplined and more open to using technology to improve returns. That combination creates selective but very interesting entry points for long term investors.
Q7: What lessons have you learned during your tenure managing the Global Opportunities portfolio?
Miguel: Several lessons stand out. It is important to stay open-minded, to challenge assumptions and to maintain a truly global perspective. Markets evolve, and leadership changes. Being willing to look beyond consensus has often led to some of our most successful investments.
Rigorous fundamental research remains the foundation of our approach. We rely on a disciplined framework to ensure that conviction is well grounded, while also being flexible enough to reassess positions when the facts change. Balancing long term thinking with a willingness to adapt has been critical to navigating different market environments.
Above all, the experience has reinforced the value of a broad opportunity set. The global equity universe is diverse, and opportunities often emerge in places that are being overlooked or undervalued. Remaining curious and attentive to these shifts has been essential to the strategy’s evolution.
To see the financial world from a different perspective, visit thornburg.com/ucits or call +1.855.732.9301
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