The significant outperformance of US stocks over the last decade is unlikely to repeat over the coming 10 years, according to Goldman Sachs Group Inc.’s chief global equity strategist.

That outperformance partly reflects the nation’s leadership in technology and the domination of the market by a handful of large companies, Peter Oppenheimer wrote in a note.

“The US equity market now has more concentration risk than other major markets, and the stock market is a much higher share of the economy in the US than elsewhere.” Investors should instead diversify, he said.

With two months left of 2023, returns on the S&P 500 boast about a 9 percentage-point lead over global stocks. The index is on course for its eighth year of outperformance in the past decade.

Low interest rates, strong economic growth and US dominance in the tech industry helped boost the country’s equities. But now, concerns are rising over the impact of the Federal Reserve keeping rates higher for longer.

“US households also own much more equity than those in other markets,” the strategist said. “Further equity ownership could be constrained by increased competition from other asset classes such as cash and fixed income.”

Oppenheimer added that US stock valuations are at a significant premium relative to history as well as other markets. “Investors should increasingly focus less on regional exceptionalism and more on investing in exceptional companies irrespective of location,” he said.

In the same Goldman publication spanning views from several market participants, strategists David Kostin and Lily Calcagnini said they expect US stocks to outperform over the longer run. While high valuations could hinder strong returns, US stocks can outperform global peers if company managements continue boosting their return on equity.

This article was provided by Bloomberg News.