Does a company’s stock market location matter to fund managers?

Global equity fund managers will often argue that it doesn’t matter where a company is listed. They might say all that matters is buying the best companies regardless of where in the world their shares happen to trade.

This has logic. Large companies are often global in nature and generate revenue both inside and outside their domestic market.

The FTSE 100 is a good example, where approximately three quarters of its constituents’ collective revenue is generated outside of the UK.

STS Global Income & Growth Trust can invest in any stock market in the world and has one third of its portfolio invested in London-listed companies. However, only 8% of the overall revenue comes from the UK.

“When I was investing in the 1990s, people would spend hours debating whether to add 2% to Europe or take 2% out of Japan or whatever it might be,” says STS’ lead manager James Harries. “What you should be thinking about is where businesses make money.”

What’s behind a shift in fund managers’ thinking?

Part of this shift in fund managers’ general approach is that over the past three or four decades, stock markets have become much more global.

A change in philosophy is also part of fund managers’ efforts to drown out the ‘noise’, by which they mean the headline, news-grabbing events which can fuel short-term thinking and fog the long-term investment picture they’re trying to focus on. Being more ambivalent about their regional exposure reflects this thinking.

That only works to a degree. While almost all active fund managers will press the point they are driven by the bottom-up, stock-specific fundamentals of what makes Company A better than Company B to invest in, sometimes its location will tip the scales.

“It’s the sort of thing that doesn’t matter until it does,” says James Flintoft, AJ Bell’s Head of Investment Solutions.

“Most fund managers will tell you it doesn’t really matter because they’re looking for the best opportunities globally. And then suddenly when an event happens, such as the Italian election and Italian stocks are up and down all over the place, or the euro is in crisis, it suddenly matters that your fund is invested there,” Flintoft explains.

A recent example was in 2025 when the idea of US exceptionalism was challenged by Donald Trump’s Liberation Day tariffs, which led to a deliberate move by certain fund managers to shift some of their investments out of the US and into Europe. Between one day and the next, nothing had changed about many US-listed companies other than the political, economic and sentiment backdrop of the countries they are listed in. “I’m a big believer that a macro-overlay is a useful lens,” adds Flintoft.

The AJ Bell Investments Team considers a company’s headquarters and listing venue when investing because this helps avoid major concentration risks. Sometimes, they want exposure to specific macro-economic drivers in different areas.

For example, China represents 8% of the AJ Bell Global Growth Fund and Flintoft says China has seen some positive economic boosts, building up its own technology capability and looking stable as a large-scale economy in comparison to erratic decisions from the US. “Some parts of the market, like electric vehicles, have taken off as demand has risen from drivers in Europe following the start of the Iran War,” he remarks.

Choosing what to avoid

It isn’t only a case of choosing which macro-economic drivers to be exposed to but also avoiding certain risks.

In 2016 when the result of the Brexit vote surprised many people, the UK market was handed a higher risk premium overnight by the market as it became tainted by the main thing investors fear: uncertainty.

James Thomson, manager of the Rathbone Global Opportunities Fund, deliberately reduced the fund’s UK exposure directly because of Brexit-related concerns. Prior to the referendum, the fund had 24% invested in the UK and by 2018 this was just 4%. Today, it’s back up to almost 8%, but still a long way from the pre-2016 level.

Indeed, the UK stock market has been unable to shake off its ‘unloved’ status among global investors for the past decade, due to a long list of market-wobbling events. Brexit was followed by years of political instability and change at a time when tech stocks have dominated stock market returns and investor appetites.

Looking purely at bottom-up fundamentals, many argue the UK has proven quality businesses at historically low valuations, but global managers aren’t buying them partly because of where they’re based.

Experts in the field

Another consideration for global equity managers is that while they can partake in any market, often what gives them that ability to find the best companies is deep, qualitative research.

A fund manager having a footprint in the same area as the companies they are investing in can make a big difference.

While the trading information of any public company is freely available and people in the investment industry can often have a meeting with a representative, having boots on the ground allows you to better understand the politics.

Being able to speak the local language is also a benefit as it removes the risk of key information being lost in translation.

Past performance is not a guide to future performance and some investments need to be held for the long term.