The US equities market represents approximately 72% of the global equities market as represented by the MSCI World Index. Given the dominance of the US equities market it makes sense for growth – oriented investors to include this market sector in their equities investment strategy.

The most important reason for growth – oriented investors to include US equities in their investment strategy is the relative outperformance of this market sector compared with non – US markets. Over the past decade the US equities market has generated an annualised return of 13.6% in USD terms (MSCI USA for the 10 years to 31 July 2025) compared with only 6.1% for non – US markets for the equivalent period. As an investor over this period, $100,000 invested in the MSCI USA would have grown to $359,000 versus a lump sum of only $181,000 for an investment in non – US markets.

Key Reasons for US Equities Market Outperformance

There are several key reasons for the outperformance of US equities compared with  non – US markets.

1. Stronger corporate economic performance

A key metric of corporate profitability is the Real Return on Investment (RROI), which adjusts traditional balance sheet, income, and cash flow measures to reflect true economic returns.

The data shows that the average large US industrial/service company has achieved an 11% RROI over the past decade, versus just 8% for developed-market peers. More importantly, US firms were able to grow their investment base at over 20% per annum, compared with just 8.5% outside the US.

2. Capital allocation and lifestyle advantage

US management teams have proven adept at allocating capital, whether through early-stage growth investments or strategic share buybacks later in the corporate lifecycle. This discipline has supported sustainable per-share value growth.

3. Sector mix tilted to compounding businesses

The US market is dominated by technology, software, semiconductors, life sciences, and platform businesses industries where value is driven by intangible assets such as intellectual property, data, and networks. These sectors scale quickly and sustain high margins, reinforcing profitability.

4. System – level advantages

The US enjoys lower energy costs (post-shale revolution), deep and liquid capital markets, a flexible labour force, and a vibrant venture ecosystem. Together, these factors enable new businesses to scale faster than anywhere else.