International stocks have widened their lead over the S&P 500 in 2026, and Janus Henderson Investors says the gap is pushing investors to reconsider how much of their portfolios sits in a handful of dominant U.S. tech names. Portfolio manager Julian McManus is finding value in European banks, Japanese financials, and select Korean and Chinese stocks, though some advisers still back the S&P 500.
Overseas markets have pulled ahead of Wall Street this year, and Janus Henderson Investors says the shift is starting to change how investors think about their U.S.-heavy portfolios. The MSCI ACWI ex-US index has climbed more than 8% year to date, according to LSEG data cited by Julian McManus, portfolio manager on Janus Henderson Investors' Global Alpha Equity Team. Over the same stretch, the S&P 500 has gained 6.8%, the data showed.
He told CNBC that investors are growing more willing to explore markets outside the U.S. after years of favoring American stocks. Janus Henderson managed about $480 billion in assets as of March 31.
Magnificent Seven concentration raises flags
Those seven stocks, according to McManus, account for nearly half of the S&P 500: "The Mag Seven is nearly half of your index, and you're all in," he warned, adding that a reversal in their leadership would create problems for concentrated portfolios. Still, McManus stopped short of calling the shift a wholesale exit from U.S. assets. He said it reflects growing openness to diversification rather than a stampede out of American holdings, adding that politics has played only a limited role in the reallocation so far.
Where McManus is finding value abroad
He favors European banks, which he said have grown more profitable with room for further re-rating, and Japanese banks and insurers he expects to benefit from higher interest rates after decades of near-zero borrowing costs. In South Korea, he pointed to Samsung Electronics after a recent selloff there, arguing the market has not caught up with the valuation of its foundry business.
McManus also named Tencent and CATL in China, defense makers BAE Systems and Hyundai Rotem, and drugmaker Argenx. Rather than chase individual AI winners, Janus Henderson prefers semiconductor suppliers, McManus said, calling that the firm's more disciplined route into the AI theme.
Some advisers still favor the S&P 500
Not every manager agrees with the overseas tilt. Polka Mishra, chief wealth adviser at Javelin Wealth Management, said the firm continues to favor U.S. equities, citing resilient economic growth, easing inflation and the country's continued lead in artificial intelligence.
Source: CNBC
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