$44 Billion Super Fund Goes 'Short The US And Long European Equities'

New Zealand's $44 billion Super Fund, the world's best-performing sovereign wealth investor, is taking a bold stance against Wall Street. Its investment chiefs say American equities are too pricey and are poised for a come-down, while European stocks are trading at a relative bargain, making Europe the fund's biggest overweight bet.Track European equity tracking VGK here.The move signals that even the savviest global investors are questioning the long-term dominance of U.S. markets. ETFs such as the SPDR S&P 500 ETF SPY, the iShares Core S&P 500 ETF IVV and the Vanguard S&P 500 ETF VOO track U.S. markets.Read Also: 4 Consumer Cyclical Stocks That Are Flashing Strong Fundamental SignalsBetting On Europe's DiscountBrad Dunstan and Will Goodwin, co-chief investment officers of the NZ Super Fund, told the Financial Times that the portfolio is currently 2% overweight in European equities and 3.5% underweight in U.S. stocks.Their view rests on valuations: the S&P 500 trades at nearly 27.5 times earnings, compared with the Stoxx Europe 600's 16x multiple. "Most recently, we have been short the US and long European equities," Dunstan said, stressing that the tilt reflects a decade-long perspective. Fund managers say European shares are priced below fair value while U.S. companies are riding an unsustainable premium. ETFs such as the Vanguard FTSE European ETF VGK, the Xtrackers MSCI EAFE Hedged Equity ETF DBEF and iShares MSCI Eurozone ETF EZU provide exposure to European equity.Wall Street Still Outshines, For NowThe contrarian stance comes against a backdrop of U.S. outperformance. Over the past decade, the S&P 500 has returned more than 310%, dwarfing the Stoxx Europe 600's 115%. Yet the NZ Super Fund, which has averaged over 10% annual returns since its 2003 launch – the best among sovereign peers, argues that future risks tilt against the U.S. Inflation pressures and a higher-for-longer interest rate environment loom large. While Donald Trump's tariff threats make headlines, Dunstan calls them "noise" for long-term investors. The fund's agile "total portfolio" approach, which allows managers to shift capital across asset classes quickly, has helped it repeatedly outgun rivals. Top Hedge Fund Picks From Goldman Sachs Outperform S&P 500, Powering 16% Gains In 2025 Photo: Shutterstock