Renowned and outspoken Bridgewater Associates' frontman Ray Dalio caused a stir when he announced in a recent television interview that the probability of World War III within two years had risen from 35% to 50%. Commenting on the situation between Israel and Gaza, he said that given China's actions against Taiwan, the conflict had the potential to spread throughout the region. Ultimately, he said, these factors combined raised the likelihood of a “hot” world war to 50%. The valuation gap between U.S. and global stocks suggests that foreign stocks are likely to outperform US stocks in the future.

According to Bloomberg, the ex-China ETF’s market value has surged to $6.8 billion from just $164 million at the end of 2020, while that of China ETF has dropped from a peak in January to about $6.4 billion.

Bridgewater Associates' most recent 13F disclosure showed that its largest position outside IVV is the iShares Emerging Markets ETF (IEMG). The U.S. SEC Form 13F is a quarterly report that is filed by all institutional investment managers with at least $100 million in assets under management. It discloses their equity holdings and can provide insights into what the smart money is doing in the market. IEMG and IVV both account for 5.5% of the total portfolio. Buying IEMG stock is essentially a bet on China, since five of the fund's 10 holdings are Chinese stocks. Additionally, the most heavily weighted non-U.S. stock in Bridgewater's portfolio is China's Pinduoduo Holdings (PDD), ranked No. 16. PDD is one of only two foreign stocks in Bridgewater's portfolio to be in its top 20 composition.