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Navigating the Strategic Concerns of Family Offices

I have travelled through nine US states this year, meeting with investors, family offices, endowments, foundations, county pension funds and other institutional investors. The top macro concerns amongst equity investors are:

• Tariff uncertainty has created a low signal to noise environment
• US exceptionalism still alive but concerns around valuations being in bubble territory
• Consensus exuberance for US AI technology stocks but high concentration poses a risk
• Imminent need for diversification without compromising liquidity or returns

At Trident, we believe that strategic diversification into India offers an effective solution to address these prevailing investor concerns

US stock market capitalization is more than three times the GDP

US stock market capitalisation to GDP s c.210%, a number that has historically been below 150%. For India this ratio is c.130%. As per the IMF projections, US GDP is expected to grow at a rate of 1.5% over the next three years, while India is expected to grow at more than 6% rate.

It is no surprise then that investors are excited about US exceptionalism but worried about S&P 500 valuations. S&P 500 trades at 25 times the expected earnings of this year, while India trades at less than 23 times.

In India, you pay to participate in its multidecadal growth potential.

US AI stocks – a consensus trade

The market capitalization of the top AI companies – Nvidia, Microsoft, Google, Meta, Broadcom, TSMC, Palantir, Oracle, AMD – has grown more than ten times in the last decade and they are cumulatively trade at valued at over $19 trillion. Technology stocks account for 32% of S&P 500 now, up from 21% a decade ago. Big tech stocks account for 30% of S&P 500 and this number used to be only 12% a decade ago. So not only the technology concentration has gone up, the concentration within technology sector has also increased.

Contrast this with India, which is a deepening and broadening market as the economy is firing on all cylinders. In early 2000s, India had some 20 companies with more than a billion dollars in valuation, today this number is c.350.

While US AI stocks are a consensus trade, India has been seen foreign investor outflows. Foreign ownership of India is at its lowest.

In investing, what feels comfortable is rarely profitable – US Tech is consensus buy, India is consensus sell.

Imminent need for diversification

India is expected to overtake Japan by 2027 to become the 3^rd largest economy in the world. Thereafter, US, China and India are the biggest games in town. Only two are democracies.

The great financial crisis of 2008 proved that geographic diversification is not the same as asset diversification or stock market diversification. Correlations exist in assets that are physically apart. The table below shows stock market returns for some key geographies – US, Europe, UK, Japan are largely correlated. India and US are uncorrelated. China has suboptimal investor returns over most of the last 25 years.

India is a largely domestic story that is uncorrelated with the US. Foreign investors have put no net new money in India over the last five years.

Yet Indian stock markets have returned 17% annualised returns due to an increase in domestic participation in stock markets. This is the evidence of the uncorrelation of the Indian stock markets from foreign flows.

India is a domestic consumption story, uncorrelated from the US

Tariff uncertainty

India is not an export-oriented country like Taiwan, Vietnam or Malaysia. US-India total trade is c.$130bn which is 3% of India’s GDP and 0.5% of US’s. The worst-case impact of the 50% tariffs on all goods exported from India would be 60bps. Accounting for exemptions the impact of tariffs would be c.40bps.

India-US partnership is not too deep economically but it is critical from a strategic geopolitical and defense perspective.

At Trident, we agree with Charlie Munger when he says on the topic of macro conditions – “Micro is what we do, macro is what we put up with”

At Trident our conviction has never been stronger. Our message to our investors is very clear: The time to invest in India is now.

Sachee Trivedi

New Delhi,  India

September 15, 2025

For more information please contact Spotlight Family Office Group at Info@SpotlightFamilyOffice.com.