Dilip Kuner
MANY expats in Spain rely on investment portfolios, pensions, and savings plans that are still heavily exposed to markets thousands of miles away. Most of the time, that’s a strength.
Right now, it could be a serious vulnerability.
A growing number of leading financial institutions are warning that US stock markets could be heading for a sharp correction of up to 10% this quarter. Among them is deVere Group, one of the world’s largest independent financial advisory and asset management organisations, which has 120,000 expats client globally.
The firm says the risks are building quietly: slowing consumer spending, stubborn inflation, weaker growth forecasts, and rising pressure from new tariffs under President Trump’s revived trade agenda.
“For international investors living here in Spain, especially those drawing income from overseas assets, this is a critical moment,” says Josh Dixon, Senior Wealth Adviser at deVere Spain.
“A large number of expats have portfolios that look diversified; but in reality, they’re still dominated by US exposure. If that market turns, the impact will be felt immediately.”
What’s behind the warning?
US markets have had an exceptional run. The S&P 500 is up over 20% in the last year, driven by optimism over artificial intelligence, consumer resilience, and hopes for interest rate cuts.
However, beneath the surface, the momentum is looking increasingly fragile.
Fresh economic data shows signs of weakening: inflation remains persistent, consumer sentiment is falling, job growth is softening, and input costs are rising across key sectors.
Meanwhile, renewed trade tensions are pushing up the cost of goods and disrupting global supply chains.
“We’re seeing the classic signs of a market running on sentiment rather than fundamentals,” says Dixon. “Earnings forecasts are being downgraded, margins are tightening, and yet prices keep climbing. This is not sustainable.”
He adds that many expat investors may be unaware of how closely their financial future is tied to these trends—especially if they’re invested in broad-based index funds, pension drawdown portfolios, or exchange-traded funds (ETFs) that follow global markets.
Where are the risks hiding?
One of the most common pitfalls, according to Dixon, is assuming that a fund labelled as ‘global’ is genuinely diversified.
“It’s incredibly common to see portfolios made up of low-cost trackers or ETFs that give the illusion of diversification,” he explains.
“But in reality, many of those products are 60–70% weighted to US equities—particularly large-cap tech stocks.”
ETFs have grown in popularity among expat investors for their simplicity and low fees. These funds trade like shares but offer exposure to entire markets or sectors. While they can be useful tools, many track US-heavy benchmarks like the S&P 500 or MSCI World Index, which means that what appears to be a broad global strategy is, in fact, highly dependent on one market.
“The problem isn’t ETFs themselves. It’s that many investors don’t realise what they actually hold,” Dixon says.
“If the US takes a hit, it won’t just be people with direct US stocks who feel it. Anyone holding these funds is exposed.”
Why this moment matters for expats
For expats living in Spain, especially those who are retired or financially independent, the potential for a sharp drawdown in US markets could be more than just a paper loss.
If you’re drawing income from an investment account or using it to fund a property, lifestyle, or school fees, even a short-term correction could cause disruption.
“We work with people across the country—Costa del Sol, Balearics, inland towns—who rely on overseas investments to fund their lives here,” says Dixon.
“If there’s a 10% drawdown and you’re forced to withdraw during that dip, it can have long-term consequences on portfolio health.”
The solution, he says, is not panic, but planning.
“Now is the time to seek advice, take stock of your exposure. Not once the market starts to fall.
“The whole point of diversification is to protect against the shocks you can’t time.”
Where to look beyond the US
Not all markets are showing the same risks. Several economies are offering steadier fundamentals, lower valuations, and stronger policy frameworks.
Dixon points to Singapore as a standout example: its main index has risen nearly 5% in the past month, supported by healthy exports, stable inflation, and confidence in its financial infrastructure.
Europe, too, is quietly regaining strength. Germany’s DAX has rebounded on the back of improving industrial output. The FTSE 100, often overlooked, continues to attract capital thanks to strong dividends and more attractive entry points.
“There’s no shortage of opportunity if you’re willing to look beyond the headlines,” says the financial expert.
“In fact, a global downturn often produces some of the best opportunities, but only for those who’ve kept a balanced approach.”
Living abroad gives expats a natural advantage: a global mindset. But that doesn’t always translate into global portfolios.
“Just because you live in Spain doesn’t mean your money is working internationally,” says Dixon.
Don’t wait for the US to stumble to find out you were overexposed. With signs of stress building and market sentiment stretched, global diversification isn’t just a good idea; it’s an urgent one.
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