Where to invest - USA, UK FTSE or EU?

The USA market is looking very volatile at the moment. It is not clear whether USA $ index ETFs are a good investment right now, compared to the UK or Europe (or even other areas such as Japan, etc.).

US stocks have fallen for five days running as traders nervously await a speech from Federal Reserve chairman Jerome Powell.

I use my GIA accounts for safer, less volatile, longer term investing. In these GIA accounts I hold HMWS, EQGB, XLKQ and IUCM (the first MSCI all world containing approx. 60% US companies and the last three almost 100% US companies). So long-term, I am very Tech biased and thus USA biased.

However, in my £20K ISA account on Trading 212, I have a lot of fingers in a lot of pies as I like to short-term and mid-term trade within this account because any gains within my ISA will not trigger any CGT. 

       



This morning's T212 ISA mix is quite a mess at the moment (IRR 13%) as I am top-slicing many of the larger holdings in order to hold cash, ready to buy on the forthcoming dip.

The promise of AI seems to have been oversold as far as I can see. The chip producers and AI software companies seem to have overpromised. AI will benefit certain service sectors and finance sectors however, especially anyone who uses a large number of real live humans for support services, etc.

Another complication is the weak $Dollar rate vs the UK £GBP or EU €Euro.

The 3-month chart below shows how the $Dollar rate has affected gains on index funds for UK investors:

3 Month performance

19%    BNKE EU STOXX Banks
15.5% XLKQ US Tech

11.4% IUSE S&P 500 EURO HEDGED
9.3%   CSP1 S&P 500 CSP1

10.52  NESP   Nasdaq 100 ESG
9.7%   EQGB Nasdaq 100 HEDGED

10.3% IWDE MSCI World HEDGED
8.2%   SWDA MSCI World

9.6%   PSRU  FTSE 100 RAFI Select Dist.
7.0%   CUKX FTSE100

5.0%   VMG FTSE 250
4.1%   MEUD EU STOXX 600

These mostly accumulating index funds show that Tech and Finance sectors are still winners. When we look at countries however, hedged indexes have outperformed their unhedged versions over the last three months except for perhaps the Nasdaq 100.

If we look at the performance of hedged indexes over the last month however, we see that the unhedged versions are now winning over the hedged versions.

It is looking to me that unhedged US stocks are now beginning to win overall, however things may change in the next few weeks depending on the markets reaction to Jerome Powell's Jackson Hole speech today.

My favourite major index funds for the long term are still BNKE, IITU/XLKQ, IUCM, HMWS/IWDE, EQQQ/NESP/EQGB and PSRU. I also hold the Artemis Global Income fund (not available on T212).

The Hedging Experiment

It is far too early to get any meaningful results yet from my hedging vs unhedged experiment yet, but here are this Friday morning's results (before US market opens - £50 was invested in each on Monday 18th August 2025 in a Trading212 ISA Pie)...

The home market FTSE 100 RAFI is still looking good however!

I will watch the $USD rate next week with interest.