While July saw a rally in most equity market regions (with the notable exception of China), the notable performance was delivered by US equities which outperformed the World ex US index by 5.8%.

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Chart 1: Comparing regional equity returns in July (USD, TR, %)

^{Source: Refinitiv, FactSet}

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Looking at 10-year annualized returns US equities have delivered 13%, more than twice the 5.9% return from the World ex US.

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Chart 2: Regional 10-year aggregate and annualized returns (USD, TR, %)

^{Source: Refinitiv, FactSet}

July produced an inflection in relative performance characteristics

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The rally in the US relative performance in July saw it rebound back to levels seen earlier this year. By contrast, Emerging Market relative performance weakened

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Chart 3: Relative performance charts for the US and Emerging Markets

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^{Source: Refinitiv, FactSet}

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Sector weighted performance contributions explain why the US outperformed

To identify the driver of US equity outperformance in July, it is useful to utilize sector weighted performance contribution analysis. Exhibit 4 compares the sector weighted contributions for the US and the World ex US indexes. The majority of the almost 6% outperformance of US equities in July was almost entirely due to the scale of contributions from the Technology and Consumer Discretionary sectors.

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Chart 4: Sector weighted performance contributions US and World ex US for July

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^{Source: Refinitiv, FactSet}

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^{Index 15303321 E0922}

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