International small caps offer a timely way to cut U.S. mega-cap concentration risk - with attractive valuations and upside as global leadership shifts. Key takeaways Equity market returns over the past decade have been led by a narrow cohort of U.S. mega-cap technology companies, leaving many equity investors’ portfolios more exposed to concentration risk than headline indices may suggest. International small-cap equities can help balance this concentration risk, offering meaningful diversification benefits, attractive valuations and potential for relative outperformance as international equity markets cyclically reassert leadership. While U.S. equities may continue to benefit from AI and stronger relative economic growth, international small-cap equities offer investors a compelling and timely way to position ahead of the next equity leadership cycle.