Global Growth Equity Rebound: How Calamos Capitalizes on Europe's Shift and China's U-Turn

The Calamos Global Equity Fund (CIGEX) has emerged as a standout performer in Q1 2025, outpacing global benchmarks by double-digit margins amid a seismic shift in global economic dynamics. As U.S. protectionism curtails "exceptionalism," the fund is capitalizing on two critical revaluations: Europe's cyclical recovery fueled by infrastructure spending and China's policy pivot toward fiscal easing. This article explores how these trends are reshaping global equity opportunities and why investors should reallocate capital now to capture this inflection point.

The Decline of US "Exceptionalism" and Its Impact

The fund's outperformance begins with the waning dominance of U.S. equities. New U.S. policies—such as tariffs on tech components, fiscal spending cuts, and regulatory crackdowns—have introduced uncertainty into sectors like semiconductors and pharmaceuticals. This has led to a rotation of capital toward non-U.S. markets, as highlighted by the fund's 63.5% U.S. equity exposure, down from historical benchmarks.

Europe's Revaluation: Infrastructure and Defense as Growth Catalysts

The fund's strategic bet on European equities has been its crown jewel. Key drivers include:
1. Germany's Infrastructure Spending: A commitment to 1-2% annual GDP growth via road, rail, and green energy projects has revitalized industrials and materials sectors.
2. NATO Defense Spending: A 3-5% GDP target for military budgets has boosted defense contractors and banks.
3. Bank Sector Turnaround: Rising loan demand and easing regulations have improved profitability, with the fund holding stakes in select European financials.

The fund's top holdings in industrials and materials, such as Rolls-Royce and Canadian Natural Resources, are positioned to benefit directly from these trends.

China's Policy U-Turn: Fiscal Easing and Tech Support

After years of regulatory crackdowns, China's leadership has signaled a U-turn toward growth-friendly policies. Key moves include:
- Monetary Easing: Lower interest rates and liquidity injections to stabilize the property market.
- Tech Sector Support: Reduced scrutiny of AI and cloud companies, aligning with Beijing's push for technological self-reliance.
- Market Liberalization: Moves to improve capital market transparency and attract foreign investment.

The fund's selective exposure to Chinese equities—such as Eli Lilly (via partnerships) and Taiwan Semiconductor (受益于中国供应链重组)—positions it to capitalize on this shift without overexposure to geopolitical risks.

Why Now? The Case for Global Growth Equity Rebalancing

The confluence of European revaluation and China's U-turn presents a rare opportunity for global equity investors. Three factors justify reallocating to funds like Calamos:

1. Currency Tailwinds: A weakening U.S. dollar (down 8% YTD vs. the euro) amplifies returns on non-U.S. holdings.
2. Valuation Discounts: European and Chinese equities trade at 25-30% discounts to U.S. peers, despite improving fundamentals.
3. Thematic Synergy: AI innovation (led by NVIDIA and Microsoft) and infrastructure spending create cross-border opportunities.

Risks and Mitigation

No strategy is risk-free. Key concerns include:
- US Trade Policy Volatility: New tariffs or sanctions could disrupt supply chains.
- Geopolitical Tensions: Taiwan, Ukraine, or Middle East conflicts could roil markets.
- AI Overvaluation: Excessive optimism in tech stocks may lead to corrections.

The fund mitigates these risks via sector diversification (31% tech vs. 14% industrials) and a balanced portfolio structure (mixing secular, cyclical, and defensive stocks).

Investment Recommendation

For growth-oriented investors, Calamos Global Equity Fund (CIGEX) offers a compelling entry point to capitalize on global revaluations. Key actions to consider:
1. Reallocate 10-15% of a U.S.-centric portfolio to global equities like CIGEX.
2. Focus on thematic funds with expertise in Europe/Asia policy dynamics.
3. Avoid U.S. sectors overly tied to protectionist policies, such as semiconductors and industrial goods.

Conclusion

The Calamos Global Equity Fund's Q1 2025 outperformance underscores a critical truth: global growth is no longer hostage to U.S. cycles. By betting on Europe's cyclical revival and China's policy pivot, the fund exemplifies how investors can thrive in a multipolar economy. As valuations realign and secular trends like AI accelerate, now is the time to rebalance toward global equities—and let the world's growth engines drive returns.

Data as of June 19, 2025. Past performance does not guarantee future results.