It has not been a good year for the S & P 500 . The U.S. benchmark has lost 25% of its value so far this year, putting it firmly in bear market territory. And it could still fall by “another easy 20%” from current levels, JPMorgan Chase CEO Jamie Dimon predicted on Monday . A sharp decline in equity markets is a familiar story around the world, as investors flee stocks against a backdrop of stubbornly high inflation and rising interest rates that threaten to derail global economic growth. But one index is beating the S & P 500, according to investment veteran Jeffrey Kleintop — and it’s not one you might expect. “Stocks in the MSCI United Kingdom Index have outperformed the S & P 500 this year,” Kleintop, chief global investment strategist at Charles Schwab, told CNBC’s “Street Signs Asia” on Thursday. The MSCI United Kingdom Index, which includes large and mid-cap U.K. stocks, is down about 5% and 22% this year, in sterling and dollar terms respectively, according to Eikon data. The outperformance is due to higher earnings estimates for U.K. stocks, he explained. Indeed, the U.K has been a “surprising exception” at a time when earnings estimates are falling around the world, Kleintop said, with earnings estimates for U.K. companies continuing to trend higher in the second half of the year — particularly when compared to the S & P 500. “Analysts’ consensus S & P 500 EPS estimate for 2022, at about $224, has been declining since June. But earnings for U.K. companies have continued to climb to over ?230 [$256] from ?170 at the start of the year,” he added. Kleintop noted that a key reason for U.K earnings strength is the British pound’s weakness against the U.S. dollar this year. “Historically, earnings for U.K. companies benefit from a weak pound. Currently, the largest share of revenues for U.K. companies are in dollars at 27% for the companies in the MSCI United Kingdom Index, larger than the 19% of sales that are in pounds,” he said. “With most costs in pounds, the result is that U.K. businesses are seeing a positive currency contribution to their earnings growth,” he added. While U.K. stocks may be a relative outperformer this year, the British economy continues to battle a slew of problems , including a currency at historic lows against the dollar, a sharp sell-off in U.K. government bonds and a near collapse in pension funds . Outperformers in a bear market So how should investors position against a backdrop of global economic uncertainty? “For investors, we continue to highlight characteristics of stocks that are outperforming in this recessionary bear market environment. Rather than focus on the one sector that has posted gains, all this year we have focused on ‘quality’ stocks across sectors and countries,” Kleintop said. He favors short-duration stocks, which he said have been “outperforming all year by a wide margin.” These stocks have more immediate cash flows, whereas long-duration stocks, also known as growth stocks, derive much of their cash flows in the more distant future. Investors, though, are more likely to find short-duration stocks outside the U.S market. They comprise about 70% of all stocks on non-U.S. indexes, according to Kleintop. “That is one reason international stocks are outperforming the S & P 500 by 800 basis points measured in local currency, even though they are lagging by 400 basis points measured in dollars thank to this year’s dollar strength,” he said.