Geopolitics caught everyone’s attention in 2025, with U.S. President Donald Trump often on centre stage.
The ongoing global geopolitical drama has caused far-reaching ripple effects, including in the area of retirement savings funds. “Diversification is a big thing right now,” says Lisa Robson, a Certified Employee Benefits Specialist and Senior Consultant at Belay Advisory, a member firm of Benefits Alliance.
Robson is having more conversations with plan sponsors or their retirement committees about rebalancing investment portfolios to focus less on U.S. markets and more on those in Europe or Canada. “They’re not willing to move everything over, of course, but investment-savvy people are interested in exploring the opportunity to go elsewhere with some of their money. It’s a little bit of a hedge and a little bit of protecting your rear flanks.”
For those who are weighing their regional diversification options, the first thing to understand is that where funds are concerned, “global” and “international” are not interchangeable terms. Angela Maitland, Chartered Financial Analyst and Investment Solutions Executive at Sun Life, explains: “Global includes North America. The way market capitalization is right now, a global index is 70 per cent U.S. funds—so members who see U.S., international, and global in their lineup and choose all of them can end up with an unintentional overweight to U.S. equities.”
Taking the long view
It’s also important to keep international versus U.S. performance during 2025 in context. While U.S. equity underperformed international counterparts last year, “some of that is a give back after outperforming for many, many years,” Maitland says. “European stocks were starting from a lower base, so it’s easier to post bigger performance numbers.”
But math doesn’t explain the shift entirely. She also sees new enthusiasm about, for example, opportunities to invest in European defense stocks and their support sectors.
Decisions about diversification may weigh additional factors, such as how much a country depends on U.S. trade or how strong a record it has in managing issues such as climate risk or cyber security. Those types of evaluations will depend in part on whether the potential investment is destined for emerging markets or global equities.
Plan sponsors’ unique requirements and objectives also factor into the equation. Yet few have the time or the training to delve so deeply into their retirement portfolios. “A trusted relationship with your benefits advisor is key. And your advisor in turn has built solid relationships with proven providers,” says Robson.
“Most plan sponsors who select investment options for their plan members hire active global or international investment managers to make regional decisions,” Maitland agrees. “As providers, we can make it easy for sponsors to offer their members diverse investment options to help deliver good results for their members in terms of retirement readiness.”
For example, part of asset-class managers’ foundational annual process is calculating the optimal amount of international investments. “They figure out their forward-looking estimates for capital market returns, risk correlation parameters, and put those numbers into their modeling,” says Maitland.
Having that expertise on hand is especially reassuring at a time when no one is feeling definitive about anything. Even those leaning toward more diversification are cautious, Robson says. “We’re all waiting to see what happens. Everything is such an unknown right now. But for those who are more investment savvy, diversification has definitely come to the front of their minds now.”