Archive · 13 Nov 2025
Bank of America Suggests Looking Abroad for Value and Dividends
Imagine you have a favorite toy that's super popular right now, like AI stocks.
But sometimes, even popular toys can have ups and downs.
Some smart grown-ups at a big bank say that while the AI toy is still fun, there are other exciting toys in other countries that might be a safer bet for getting more prizes (like money).
They suggest looking at smaller companies in other countries that are like the 'value' versions of popular toys, and also companies that give out 'dividends', which are like little treats of money regularly.
These international toys might not bounce around as much and could give you good rewards.
They even recommend some special toy boxes, called ETFs, that hold lots of these different international toys so you don't have to pick just one.
Bank of America strategists recommend diversifying investments beyond US AI stocks.
They suggest looking for value and dividend-paying stocks in international markets, particularly in emerging markets and Asia.
International small-cap value stocks are highlighted for potentially offering similar returns to US growth stocks with less risk.
Emerging market dividend stocks and bonds are noted for attractive yields and lower correlations to US equities.
While not dismissing US AI stocks entirely, BofA believes a global rally may have 'longer legs' due to various global economic factors.
- Who
- Bank of America strategists
- What
- Recommending investors diversify beyond US AI stocks to find value and dividends in international markets, including small-cap value, emerging market dividend payers, and EM debt.
- When
- A research report released on Wednesday.
- Where
- International markets, including emerging markets and Asia (excluding Japan).
- Why
- To achieve better returns with lower volatility, correlation, and valuation compared to US growth stocks, and to benefit from global rate cuts and a potentially declining US dollar.
Invest in US AI Stocks
Diversify with International Stocks
AI Trade Potential
Invest in US AI Stocks
The AI trade, despite recent speed bumps, still has room to run thanks to expectations of more rate cuts from the Federal Reserve and continued demand for AI assets. The tech ecosystem is set to expand until enterprise buyers, household creditors, or FOMC voters say 'enough'.
Diversify with International Stocks
While US AI leaders may continue to see gains, the market is much bigger than US tech titans. Diversifying beyond AI into global equity factors with lower correlations to US growth can offer attractive returns.
International Equity Performance
Invest in US AI Stocks
Growth has topped value in America.
Diversify with International Stocks
Since 2000, average annual returns for both emerging market value and Asian value stocks (excluding Japan) have outpaced their growth counterparts. International small-caps offer similar returns to US growth with lower volatility, correlation, and valuation.
- Bank of America Recommendation
- Diversify beyond AI into international value stocks, small market capitalizations, and emerging markets dividend players.
- International Small-Cap Value ETFs Recommended
- Dimensional International Small Cap Value ETF, Avantis International Small-Cap Value ETF, iShares International Developed Small Cap Value Factor ETF
- Emerging Market Dividend ETFs Recommended
- SPDR S&P Emerging Markets Dividend ETF, WisdomTree Emerging Markets High Dividend Fund
- EM Debt ETF Yield Example
- BondBloxx JPMorgan USD Emerging Markets 1-10 Year Bond ETF yields 6%
- US Aggregate Bond ETF Yield Example
- iShares Core U.S. Aggregate Bond ETF yields less than 4%
- Reason for International Appeal
- Potential for longer global rally legs, lower correlation to US equities, declining US dollar, and policymakers pushing for self-reliance.