In a striking reversal of fortunes, equities in developed markets ex-US are now leading the major asset classes in 2025 while US shares are posting a modest loss year to date, based on a set of ETFs through Wednesday’s close (Mar. 5).

The Vanguard FTSE Developed Markets ETF (VEA) is up 9.8% so far this year, in stark contrast with a 0.9% decline for its American counterpart, Vanguard Total US Stock Market Index Fund ETF (VTI).

The developed-markets ex-US fund (VEA) is also leading the rest of the field by a wide margin. The second-best performer for the major asset classes this year: US real estate investment trusts (VNQ) with a solid 5.9% advance.

For context, note that the Global Market Index (GMI) is ahead by a modest 1.8% so far in 2025. GMI is an unmanaged benchmark (maintained by CapitalSpectator.com) that holds all the major asset classes (except cash) in market-value weights via ETFs and represents a competitive benchmark for multi-asset-class portfolios.

The sight of US stocks falling to the back of the line and posting the only loss year to date among global markets highlights a dramatic shift in leadership, but the catalyst is no mystery. President Trump’s trade war has roiled markets, unleashing a surge of uncertainty about the macro implications. The US economy isn’t likely to be immune. As noted yesterday on CapitalSpectator.com, first-quarter growth nowcasts for US GDP have fallen sharply lately.

The Wall Street Journal today reports: “Investors entered 2025 optimistic that an already strong U.S. economy could get an extra boost from an administration pushing market-friendly tax cuts and regulatory rollbacks. Instead, trade tensions and signs of slowing growth have driven major indexes lower in recent weeks.”

“Ironically, in a year [where] everyone said America First, other markets, including emerging markets and Europe, might outperform,” said David Hauner, global head of emerging markets and FX strategy at BofA. “We may be at the beginning of a bigger shift here.”