The status the U.S. has enjoyed as the investing destination of choice looks to be in jeopardy for 2020, according to private equity giant KKR.Following a year in which the domestic market rose nearly 30%, increasing valuations and the prominence of other nations make the U.S. no longer the only, or at least the best, game in town, the firm said in a lengthy overview of what the new year presents.”We think the U.S. ends its reign as the dominant equity market in 2020,” wrote KKR experts led by Henry H. McVey, the firm’s head of global macro and asset allocation. “Non-U.S. markets are now cheap enough that, even with their flawed compositions … they warrant investor attention for at least a cyclical ‘catchup trade.'”One of the biggest and perhaps most unappreciated challenges facing investors is political risk.’Particularly consequential'”While all presidential elections are important, 2020 could be particularly consequential, as both a referendum on President Trump’s disruptive leadership and a harbinger of future direction for U.S. policy and politics,” KKR wrote. “As populism and polarization have grown, increasingly ideological and angry voters have been attracted to leaders who emphasize our collective differences – versus other, more consensus focused politicians during the recent past.”The firm warns against making short-term bets based on political calculations.At the same time, long-term investors are advised to look past the election “noise” and consider what ramifications the changing political landscape will have.”President Trump did not create this dynamic, but he is particularly adept at highlighting and exploiting divisions, and his presidency has accelerated this trend,” the analysis said. “Once repelled by President Trump, many Democratic leaders actually now mimic parts of his divisive style.”Where the buys areBetting against U.S. stocks hasn’t worked well for most of the current bull market, which will turn 11 years old in March.Over the past 12 months, while the S&P 500 has risen 27.1%, stock markets in the rest of the world are up just 15.4%, as measured by the Vanguard FTSE All-World ex-US ETF.Still, KKR thinks there are opportunities elsewhere as U.S. investors already have priced in a “robust economic recovery” while KKR’s models suggest “only a modest recovery” for corporate earnings that have been in recession for what could be the fourth straight quarter to start 2020.Investors should look to expanding economies in Brazil, Mexico, China, India and Indonesia, rather than just investing in emerging markets generally.As for specific themes, KKR sees environment, governance and sustainability as a key. BlackRock CEO Larry Fink on Tuesday said the asset manager would be emphasizing ESG heavily going forward and using its influence on the companies in which it invests.KKR also is focusing on undervalued companies that have strong potential for return on equity. The firm also favors infrastructure and real estate and said cash flow will be important as well.As for its general outlook on the U.S., KKR raised its GDP forecast from 1.3% to 1.9% and said that while this year could be an underperformer, the longer-rage outlook is still positive.KKR is the third-ranked firm in the world in terms of fundraising, according to Private Equity International.