Overview of current valuations and valuation-aware Portfolios
(For introduction to the Cyclically-adjusted Price/Earnings ratio (CAPE) see here)
Current market valuations:
The “All Country” market valuation is dominated by the US high prices and can be considered as very high (ca. 30% above the recent 10 Year median, measured in CAPE). Avg. CAPE of ACWI IMI: 34.0 (10Y median – ca. 26)
Valuations of the US market are nearing all time high territory (ca. 27% above “normal”), very similar to both the Dotcom phase (1999-early 2000) and the Post-Covid High valuation phase of 2021. The Media is already talking about the “AI-bubble”, because the high valuations of the magnificent seven also leads to an extraordinary high market concentration in Big-Tech. However, as those firms have also extremely high and consistent earnings, the situation is not directly comparable with the Dotcom bubble.
Most other markets are also richly valued, at least compared to their own 10Y valuation levels. Normally valued markets are China, Australia, and Switzerland. Also European countries like France and UK have normal valuation levels. Germany is relatively richly valued compared to 10Y earnings.
Commentary for a rational investor’s perspective:
Valuations are a risk indicator, but not a timing tool. Rich valuations can go on for a long time, and “high” must not mean “overvalued”, when expected earnings growth will really set in. Being aware of rich valuations can help us manage our expectations, not making predictions.
What will always be right to do is diversifying, and being disciplined, of sticking to your plan. The valuation-aware portfolios proposed here, are built to outlast every bubble imaginable, with participation, but by a reasonable extent.
(For introduction to the Cyclically-adjusted Price/Earnings ratio (CAPE) see here)
Table 1 Comparison of end of quarter CAPE with its 10 year median value for different countries; additionally, latest valuations from 07/11/25.
Avg. CAPE of ACWI IMI: 32.1 (10Y median ca. 26)
Valuations of the US market rebounded from the intermediate drop after Trump’s tariff announcements. Now, US valuations are again as high as end of last and beginning of this year, and up to 30% higher than the 10Y median. In dollar terms, the S&P 500 has reached an all time high, however, due to the weak dollar, in EUR or CHF the US market is still trailing its all time high from February by around 10%. Other richly valued markets are India and Taiwan. Also Germany became increasingly expensive over the course of the quarter. China’s valuation is leaning slightly expensive. Markets with normal or leaning cheap valuations are UK, CHE, JPN and France.
The global equity market (ACWI IMI) has returned to an expensive valuation with around 20% higher valuations than the 10Y median.
I don’t have data for the market shares per country over the complete 10Y period, that is why the ACWI IMI 10 Y median CAPE is a rough approximation.
Current Market and CAPE-adjusted country weights
(For introduction and implementation guidance to CAPE based equivalence-weighting see here)
30/06/2025
MSCI ACWI IMI
MSCI World IMI
Global Equal-Value (CAPE10)
US
63,0 %
69,6 %
50,2 %
EU incl CHE&UK
13,7 %
15,1 %
19,1 %
CHE
2,0 %
2,2 %
2,4 %
FTSE Dev. Asia-Pacific
8,7 %
9,6 %
10,8 %
EM incl. CHI
9,5 %
0,0 %
14,4 %
CHI
2,8 %
0,0 %
5,5 %
Rest dev. World (CAN)
2,9 %
3,2 %
3,4 %
Table 2 Comparison of market weights (MSCI ACWI IMI, MSCI World IMI) with the Global Equal-Value Portfolio based on CAPE
The equivalence-weighted Portfolio (Global Equal-value) represents the global share of cyclically adjusted earnings. Due to the current high valuation in the US, all other regions currently allocate a larger share with respect to earnings than in the (price-weighted) market capitalisation portfolio.
Current Birdfolio examples with/without home-bias
(For more remarks regarding portfolio construction with or without home-bias see here)
The goal of the described Birdfolios is to replicate the Global Equal-Value portfolio with using popular indices. The difference between the two Birdfolio variants is that they use either the MSCI World or MSCI USA for covering the north american market.
30.06.2025
Birdfolio 1
Birdfolio 2
(MSCI Europe Home)
(15 %)
(15 %)
MSCI World
72,0%
–
MSCI USA
–
51,5 %
MSCI Europe
8,5 %
21,0 %
FTSE Dev. Asia-Pacific
6,5 %
14,0 %
MSCI Emerging Markets
13,0 %
13,5 %
Table 4 Allocation to popular indices of the two Birdfolio variants to replicate the current Global Equal-Value Portfolio.
In the last table the regional shares currently resulting from the different allocations are summarised.
31.03.2025
Birdfolio 1 (wH = 0)
Birdfolio 1 (wH = 15% Europe)
Birdfolio 2 (wH = 0)
Birdfolio 2 (wH = 15% Europe)
US
50,3 %
42,7 %
51,5 %
43,8 %
EU incl CH&UK
20,5 %
32,4 %
21,0 %
32,9 %
CH
2,8 %
4,6 %
3,1 %
4,8 %
FTSE Dev. Asia-Pacific
13,7 %
11,6 %
14,0 %
11,9 %
EM incl. CHI
13,0 %
11,1 %
13,5 %
11,5 %
CHI
3,7 %
3,1 %
3,8 %
3,2 %
Rest dev. World (CAN)
2,6 %
2,2 %
0,0 %
0,0 %
Table 3 Comparison of regional shares in the described Birdfolios with different Home-bias allocations
The biggest deviations to the Global Equal-Value portfolio are present in the regional shares of Switzerland, China and Canada. Also within the EU and EM markets there are stronger deviations (e.g. regarding UK and India) that can’t be resolved without introducing additional indices. However, the additional value is questionable compared to the increased complexity and rebalancing effort.
(For introduction to the Cyclically-adjusted Price/Earnings ratio (CAPE) see here)
Table 1 Comparison of current CAPE with its 10 year median value for different countries; additionally, latest valuations from 04/04/25, because of recent US tariff tumults.
Avg. CAPE of ACWI IMI: 29.8 (10Y median ca. 26)
The US market came down significantly from its high valuations due to the US tariff announcements, however, is still slightly higher priced than its 10Y median (ca. +12%). Other richly valued markets are Taiwan and India, as well as recently Germany. China’s valuation was leaning expensive before the latest large drop because of the tariff tumults. Japan’s and Korea’s valuations, as well as Switzerland’s are leaning cheap, and after the last drops also Australia’s valuation came down significantly.
The global equity market (ACWI IMI) has returned from a slightly expensive valuation in the last quarter to a normal valuation. Due to the recent sharp rise in uncertainty on the market, it remains to be seen whether valuations will fall further, possibly leading to favorable entry opportunities. However, from a valuation perspective, the fall in prices in March has not yet led to a crisis level, as valuations were relatively high beforehand.
I don’t have data for the market shares per country over the complete 10Y period, that is why the ACWI IMI 10 Y median CAPE is a rough approximation.
Current Market and CAPE-adjusted country weights
(For introduction and implementation guidance to CAPE based equivalence-weighting see here)
31/03/2025
MSCI ACWI IMI
MSCI World IMI
Global Equal-Value (CAPE10)
US
63,1 %
69,9 %
51,1 %
EU incl CH&UK
15,3 %
16,9 %
19,8 %
CH
2,1 %
2,3 %
2,3 %
FTSE Dev. Asia-Pacific
9,0 %
9,9 %
13,4 %
EM incl. CHI
9,7 %
0,0 %
12,5 %
CHI
3,0 %
0,0 %
5,5 %
Rest dev. World (CAN)
2,9 %
3,2 %
3,4 %
Table 2 Comparison of market weights (MSCI ACWI IMI, MSCI World IMI) with the Global Equal-Value Portfolio based on CAPE
The equivalence-weighted Portfolio (Global Equal-value) represents the global share of cyclically adjusted earnings. Due to the relatively higher valuation in the US, all other regions currently allocate a larger share with respect to earnings than in the (price-weighted) market capitalisation portfolio.
Current Birdfolio examples with/without home-bias
(For more remarks regarding portfolio construction with or without home-bias see here)
The goal of the described Birdfolios is to replicate the Global Equal-Value portfolio with using popular indices. The difference between the two Birdfolio variants is that they use either the MSCI World or MSCI USA for covering the north american market.
31.03.2025
Birdfolio 1
Birdfolio 2
(MSCI Europe Home)
(15 %)
(15 %)
MSCI World
73,0%
–
MSCI USA
–
53,0 %
MSCI Europe
7,5 %
20,0 %
FTSE Dev. Asia-Pacific
6,5 %
14,0 %
MSCI Emerging Markets
13,0 %
13,0 %
Table 4 Allocation to popular indices of the two Birdfolio variants to replicate the current Global Equal-Value Portfolio.
In the last table the regional shares currently resulting from the different allocations are summarised.
31.03.2025
Birdfolio 1 (wH = 0)
Birdfolio 1 (wH = 15% Europe)
Birdfolio 2 (wH = 0)
Birdfolio 2 (wH = 15% Europe)
US
51,0 %
43,4 %
53,0 %
45,1 %
EU incl CH&UK
19,8 %
31,9 %
20,0 %
32,0 %
CH
2,9 %
4,7 %
3,1 %
4,9 %
FTSE Dev. Asia-Pacific
13,8 %
11,7 %
14,0 %
11,9 %
EM incl. CHI
13,0 %
11,1 %
13,0 %
11,1 %
CHI
4,0 %
3,4 %
4,0 %
3,4 %
Rest dev. World (CAN)
2,4 %
2,0 %
0,0 %
0,0 %
Table 3 Comparison of regional shares in the described Birdfolios with different Home-bias allocations
The biggest deviations to the Global Equal-Value portfolio are present in the regional shares of Switzerland, China and Canada. Also within the EU and EM markets there are stronger deviations (e.g. regarding UK and India) that can’t be resolved without introducing additional indices. However, the additional value is questionable compared to the increased complexity and rebalancing effort.
My goal is to update this article every quarter from now on.
Current country valuations – based on CAPE
(For introduction to the Cyclically-adjusted Price/Earnings ratio (CAPE) see here)
Table 1 Comparison of current CAPE with its 10 year median value for different countries
Avg. CAPE of ACWI IMI: 31,9 (10Y median ca. 26)
The US market remains relatively expensive (ca. 24% above its 10Y median). Other richly valued markets are Taiwan and India, even though India came down slightly over the last quarter. China lost slightly from its price increase in early fall and its current valuation is leaning cheap. Korea’s valuation is also leaning cheap, partly attributable to the recent political crisis. Another slightly cheap market is Switzerland, having had a relatively bad year concerning returns, especially in die mid-small cap segments.
Due to the large share of the US (The US share increased by >2% over the last quarter, and by ca. 4% over the last year.) , the global equity market (ACWI IMI) is also more richly valued (ca. + 22%) than in the median of the last 10 years.
I don’t have data for the market shares per country over the complete 10Y period, that is why the ACWI IMI 10 Y median CAPE is a rough approximation.
Current Market and CAPE-adjusted country weights
(For introduction and implementation guidance to CAPE based equivalence-weighting see here)
31.12.2024
MSCI ACWI IMI
MSCI World IMI
Global Equal-Value (CAPE10)
US
65,21 %
72,0 %
51,4 %
EU incl CH&UK
13,7 %
15,1 %
19,6 %
CH
1,9 %
2,1 %
2,3 %
FTSE Dev. Asia-Pacific
8,7 %
9,6 %
10,9 %
EM incl. CHI
9,5 %
0,0 %
14,8 %
CHI
2,6 %
0,0 %
5,8 %
Rest dev. World (CAN)
2,7 %
3,0 %
3,2 %
Table 2 Comparison of market weights (MSCI ACWI IMI, MSCI World IMI) with the Global Equal-Value Portfolio based on CAPE
The equivalence-weighted Portfolio (Global Equal-value) represents the global share of cyclically adjusted earnings. Due to the relatively higher valuation in the US, all other regions currently allocate a larger share with respect to earnings than in the (price-weighted) market capitalisation portfolio.
Current Birdfolio examples with/without home-bias
(For more remarks regarding portfolio construction with or without home-bias see here)
The goal of the described Birdfolios is to replicate the Global Equal-Value portfolio with using popular indices. The difference between the two Birdfolio variants is that they use either the MSCI World or MSCI USA for covering the north american market.
31.12.2024
Birdfolio 1
Birdfolio 2
(MSCI Europe Home)
(15 %)
(15 %)
MSCI World
72,0%
–
MSCI USA
–
52,5 %
MSCI Europe
8,5 %
20,5 %
FTSE Dev. Asia-Pacific
6,5 %
14,0 %
MSCI Emerging Markets
13,0 %
13,0 %
Table 4 Allocation to popular indices of the two Birdfolio variants to replicate the current Global Equal-Value Portfolio.
In the last table the regional shares currently resulting from the different allocations are summarised.
31.12.2024
Birdfolio 1 (wH = 0)
Birdfolio 1 (wH = 15% Europe)
Birdfolio 2 (wH = 0)
Birdfolio 2 (wH = 15% Europe)
US
51,9 %
44,1 %
52,5 %
44,6 %
EU incl CH&UK
19,4 %
31,5 %
20,5 %
32,4 %
CH
2,8 %
4,6 %
3,1 %
4,9 %
FTSE Dev. Asia-Pacific
13,4 %
11,4 %
14,0 %
11,9 %
EM incl. CHI
13,0 %
11,1 %
13,0 %
11,1 %
CHI
3,5 %
3,0 %
3,5 %
3,0 %
Rest dev. World (CAN)
2,3 %
2,0 %
0,0 %
0,0 %
Table 3 Comparison of regional shares in the described Birdfolios with different Home-bias allocations
The biggest deviations to the Global Equal-Value portfolio are present in the regional shares of Switzerland, China and Canada. Also within the EU and EM markets there are stronger deviations (e.g. regarding UK and India) that can’t be resolved without introducing additional indices. However, the additional value is questionable compared to the increased complexity and rebalancing effort.
My goal is to update this article every quarter from now on.
Current country valuations – based on CAPE
(For introduction to the Cyclically-adjusted Price/Earnings ratio (CAPE) see here)
Table 1 Comparison of current CAPE with its 10 year median value for different countries
Avg. CAPE of ACWI IMI: 31,7 (10Y median ca. 26)
The US market is currently relatively expensive (ca. 25% above its 10Y median). Other richly valued markets are Taiwan and India. Due to the recent price increase, China’s valuation has returned to a normal level compared to the last 10 years, even if the absolute valuation is still very low.
Due to the large share of the US, the global equity market (ACWI IMI) is also more richly valued (ca. + 22%) than in the median of the last 10 years.
I don’t have data for the market shares per country over the complete 10Y period, that is why the ACWI IMI 10 Y median CAPE is a rough approximation.
Current Market and CAPE-adjusted country weights
(For introduction and implementation guidance to CAPE based equivalence-weighting see here)
30.09.2024
MSCI ACWI IMI
MSCI World IMI
Global Equal-Value (CAPE10)
US
62,8 %
69,2 %
49,5 %
EU incl CH&UK
15,1 %
16,7 %
20,1 %
CH
2,1 %
2,3 %
2,4 %
FTSE Dev. Asia-Pacific
9,8 %
10,8 %
13,9 %
EM incl. CHI
9,3 %
0,0 %
12,7 %
CHI
2,7 %
0,0 %
5,7 %
Rest dev. World (CAN)
3,0 %
3,3 %
3,7 %
Table 2 Comparison of market weights (MSCI ACWI IMI, MSCI World IMI) with the Global Equal-Value Portfolio based on CAPE
The equivalence-weighted Portfolio (Global Equal-value) represents the global share of cyclically adjusted earnings. Due to the relatively higher valuation in the US, all other regions currently allocate a larger share with respect to earnings than in the (price-weighted) market capitalisation portfolio.
Current Birdfolio examples with/without home-bias
(For more remarks regarding portfolio construction with or without home-bias see here)
The goal of the described Birdfolios is to replicate the Global Equal-Value portfolio with using popular indices. The difference between the two Birdfolio variants is that they use either the MSCI World or MSCI USA for covering the north american market.
30.09.2024
Birdfolio 1
Birdfolio 2
(MSCI Europe Home)
(15 %)
(15 %)
MSCI World
72,0%
–
MSCI USA
–
51,5 %
MSCI Europe
8,5 %
21,0 %
FTSE Dev. Asia-Pacific
6,5 %
14,5 %
MSCI Emerging Markets
13,0 %
13,0 %
Table 4 Allocation to popular indices of the two Birdfolio variants to replicate the current Global Equal-Value Portfolio.
In the last table the regional shares currently resulting from the different allocations are summarised.
30.09.2024
Birdfolio 1 (wH = 0)
Birdfolio 1 (wH = 15% Europe)
Birdfolio 2 (wH = 0)
Birdfolio 2 (wH = 15% Europe)
US
49,9 %
42,4 %
51,5 %
43,8 %
EU incl CH&UK
20,5 %
32,4 %
21,0 %
32,9 %
CH
2,9 %
4,7 %
3,1 %
4,9 %
FTSE Dev. Asia-Pacific
14,3 %
12,1 %
14,5 %
12,3 %
EM incl. CHI
13,0 %
11,1 %
13,0 %
11,1 %
CHI
3,7 %
3,2 %
3,7 %
3,2 %
Rest dev. World (CAN)
2,4 %
2,0 %
0,0 %
0,0 %
Table 3 Comparison of regional shares in the described Birdfolios with different Home-bias allocations
The biggest deviations to the Global Equal-Value portfolio are present in the regional shares of Switzerland, China and Canada. Also within the EU and EM markets there are stronger deviations (e.g. regarding UK and India) that can’t be resolved without introducing additional indices. However, the additional value is questionable compared to the increased complexity and rebalancing effort.
