Franklin Templeton’s head of global index portfolio management argues that international equity exposure has shifted from a performance trade-off to a portfolio protection strategy.
For years, the case for international equities was easy to dismiss. US large-cap stocks, led by a concentrated group of artificial intelligence winners, delivered returns that made global diversification look like a drag.
But Dina Ting, CFA, head of global index portfolio management at Franklin Templeton ETFs in San Mateo, California, has told InvestmentNews that calculus is now changing.
“It’s understandable that many investors have stayed concentrated in US large-cap given the strong returns of some AI leaders,” Ting said. “But diversification can become a risk-management decision without sacrificing performance. At that point, the question shifts from ‘What’s worked?’ to ‘Where could the next phase of growth come from?'”
Ting makes that case in a new Franklin Templeton research piece co-authored with Marcus Weyerer, CFA, senior ETF investment strategist at Franklin Templeton ETFs EMEA. The paper argues that the AI investment story which drove much of the US market’s outperformance in recent years, is now expanding geographically in ways advisors cannot afford to ignore.
AI’s next phase is about infrastructure
The shift Ting describes is structural and investor attention, she argues, has moved away from the companies building AI applications toward the businesses supplying the physical and technological infrastructure that makes those applications possible; a so-called picks-and-shovels opportunity playing out across multiple countries.
“Taiwan remains indispensable for advanced semiconductor manufacturing, Japan is well-positioned through industrial automation, test equipment and precision manufacturing, and South Korea plays a critical role in AI memory and hardware,” Ting said. “Beyond technology, we’re also watching industrials, power infrastructure and advanced manufacturing — because AI can’t scale without the physical infrastructure ecosystem supporting it.”
For financial advisors weighing how to position client portfolios, Ting offers a practical framework for distinguishing durable AI-driven earnings from speculative excess.
“We’re looking for tangible revenue growth, rising enterprise adoption and continued investment in the infrastructure that enables AI — and not just excitement around new applications,” she said. “When companies are generating cash flows alongside innovation and building a significant moat, that’s a healthier foundation than simply trading on future possibilities.”
Country-specific opportunities in a diverging rate environment
Beyond AI, Ting points to diverging central bank policy cycles as one of the most compelling tailwinds for country-level investing in 2026.
Rather than treating international equities as a single broad allocation, she argues that advisors should be selective, focusing on countries where monetary policy, valuations, and structural fundamentals are converging.
Japan continues to attract attention through corporate governance reforms and broad-based earnings growth. Brazil returned 13.3% in the first half of 2026, led by financials, materials and energy, with markets anticipating further monetary easing, according to Ting.
The International Monetary Fund projects India’s economy will expand 6.4% in 2026 — among the fastest growth rates of any major economy globally — though Ting notes Indian equities continue to trade at a premium relative to many other markets, reinforcing the need for disciplined country allocation.
“Diverging policy cycles are creating one of the strongest environments for country-specific investing that we’ve seen in years,” Ting said.
The client conversation on international equities
Perhaps the most pressing challenge for advisors, Ting acknowledges, is a behavioral one: convincing clients who have watched the US outperform for much of the past decade to maintain, let alone increase, international exposure.
“One misconception is that international investing simply means owning slower-growth markets,” she said. “Increasingly, some of the world’s most important structural growth stories — from semiconductors to advanced manufacturing — sit outside the United States.”
Her longer-term view extends well beyond AI and for a globally diversified equity portfolio built to perform over five to ten years, Ting would prioritize energy resilience, industrial automation, supply-chain diversification, digital infrastructure and demographic shifts.
“Those themes naturally point investors toward a broader geographic opportunity set,” she said. “The next decade may reward investors who diversify by source of growth, not just geography.”
Valuation discipline, she adds, matters even if it rarely signals an immediate turning point.
“The US continues to be home to exceptional companies, yet many international markets offer attractive valuations and pockets of stronger performance, alongside improving fundamentals,” Ting said. “We don’t think investors need to choose one over the other — the stronger approach is balancing exposure so portfolios aren’t dependent on a single market continuing to outperform indefinitely.”