For much of the past several years, performance leadership was concentrated in the Magnificent 7 and reflected in the dominance of the Nasdaq Composite. That narrow leadership rewarded U.S.-centric allocations and reduced the perceived need for international exposure. However, relative strength trends are beginning to broaden, with markets such as Peru and South Korea showing improving momentum supported by commodity strength, semiconductor demand, and earnings revisions. For advisors, the key shift is not that U.S. mega-cap growth has collapsed, but that global participation is expanding. When leadership broadens after a period of extreme concentration, relative performance dispersion increases and new sources of alpha emerge outside the traditional U.S. growth complex, highlighting the opportunity cost of staying overly concentrated in U.S. mega-cap technology.
Peru: Commodity Leverage and Macro Differentiation
The Franklin FTSE All Peru ETF provides exposure to a fundamentally different layer of the global growth cycle. Peruās equity market is heavily tied to mining ā particularly copper ā along with financials ā making it a leveraged play on global industrial activity and infrastructure demand. In an environment where electrification, AI-related power demand, and emerging market growth are supporting commodity prices, EPU becomes a high-beta expression of global expansion. It is also highly sensitive to movements in the U.S. Dollar Index, with a stabilizing or weakening dollar historically providing a tailwind for emerging markets and commodities. For advisors, EPU represents not just diversification, but a differentiated macro exposure that can outperform when global growth and liquidity conditions improve, offering a strategic complement to U.S.-heavy equity allocations.
South Korea: AI Infrastructure and Hardware Exposure
The Franklin FTSE South Korea ETF offers targeted exposure to the hardware backbone of the global technology cycle. With significant weight in semiconductor leaders and export-driven industrial companies, South Korea sits at a critical junction of the AI supply chain ā memory, chips, and advanced manufacturing capacity. While correlated to trends in the Nasdaq Composite, its valuation profile and earnings drivers differ meaningfully from U.S. platform companies. FLKR benefits from rising capital expenditures and semiconductor upcycles, providing a differentiated beta exposure within the global tech theme. Currency dynamics further reinforce the case for international participation: a moderating or weakening U.S. Dollar Index removes a structural tailwind from U.S. mega-cap outperformance and creates a supportive backdrop for both FLKR and EPU. For advisors, these ETFs might present a compelling opportunity to maintain global technology exposure while diversifying geographic and sector risk and managing opportunity cost in client portfolios.
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