SPY +1% YTD vs. ACWX (MSCI World ex US) +14% YTD: 13% US vs. RoW Underperformance

Qi’s Risk Model breaks it down

-             69% Macro (-9%)

-             31% Non-Macro / Idiosyncratic (-4%)

Explaining the Macro Drag:

-             Dollar weakness = -5%

US investors in RoW assets got a 5%FX boost when converting back to USD

-             Copper strength = -2%

Reflects RoW’s heavier exposure to commodities vs. tech/growth-heavy US

-             US HY credit widening = ~-2%

CDX HY spreads widened ~50bps more than other regions, e.g. Euro HY

What’s interesting?

The idio drag (-4%) has gone nowhere since March! See the first chart.

The bulk of the RoW  relative “alpha”i.e. a better fundamental opportunity set in anticipation of RoW fiscal stimulus / DeepSeek news was really during first 2mth of Q1.

Why it matters?

If macro headwinds fade — think stronger dollar, weaker copper, tighter credit — the US would regain footing.

But for RoW to extend its lead OUTSIDE of macro drivers?Might need a new catalyst — a fresh DeepSeek moment — because idio alpha i.e.what can be explained outside of macro…is stalling.

Qi reveals how dominant macro is in your portfolio.

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