Is 58% of my investment portfolio in US trackers still a good idea?

I am recently retired, new to investing, and trying to learn as much as I can.

I have just opened a Vanguard ETF portfolio of which 58% is tracking the FTSE North America. The rest includes Europe, Japan, Asia Pacific and Emerging. 10% is in Global Bonds. The S&P 500 is dominated by the Mag 7, much of it considered highly overpriced and with fantastic figures for projected earnings.

There is a prediction that the USA will cope with its massive debt by significant continuing deflation. This would impact the real return from investment in dollar-based companies when converted to pounds.

The dollar based reserve status now seems increasingly in doubt, with countries hoarding gold and the challenge of the BRICS. As a new investor, I am hoping to continue investing for 20 years or more, largely to beat inflation and build legacy.

My question is this: is 58% of my portfolio tracking the USA’s performance still a sensible investment for the future, or is it time to invest more in Europe and the global south?

You may be new to investing, but you have hit on the most important problem facing financial markets today. Any investor whose portfolio follows a similar allocation to the major global indices – the MSCI World

The US has been a pretty fantastic place to be invested over the past decade. The S&P 500

Asset management group Pimco recently pointed out:

The US has long enjoyed a privileged position, with the dollar serving as the global reserve currency and Treasuries as the go-to reserve asset. However, this status is not guaranteed. If global capital flows into US assets dwindle, it could point toward a more multipolar world with a diminished reliance on a singular reserve currency.[2]

Perhaps a more immediate worry is not simply the concentration on the US, but on a handful of powerful technology companies. The S&P 500 now has almost 40% in its top 10 constituents, and every one is a technology or technology-related company – Nvidia, Apple, Microsoft, Amazon and so on. They will shortly be joined by SpaceX, Elon Musk’s latest venture, with a range of ‘moonshot’ ambitions such as putting humans on Mars.

While these technology companies have seen astonishing growth, they are heavily skewed to the success or otherwise of AI. They are spending billions - £765bn in 2026, according to Goldman Sachs – on AI infrastructure, including data centres and chips. This is forecast to increase to $1.6tn by 2031. All the signs point to AI being a successful technology. McKinsey research shows that 80% of companies are now using it. However, not only are the companies involved now very expensive, there is a big world out there to which investors aren’t getting a lot of exposure.

You’re right to bring up emerging markets

So what can you do about it? You need to ensure that your portfolio is prepared for a range of scenarios, rather than having the equivalent of everything on red. Global stock markets have suffered two major sell-offs in the past two years and both times have been caused by worries over rising energy prices leading to inflation and interest rate rises. The areas that have provided some protection have been commodities and infrastructure, so it is worth considering strategic exposure to those asset classes as well.

Emerging markets are always likely to be volatile, but they are a way to ‘future proof’ your portfolio. It is worth noting that China has around two-thirds of the GDP of the US, and yet it makes up less than 3% of the MSCI ACWI index[3], while the US is 63.5%. That feels like a disparity that is likely to narrow over time. Some emerging market exposure may be a good option in this environment.

A final option would be to blend some actively managed funds

It may be that AI proves to be every bit as successful as investors hope, that the US can outgrow its debt, that the Dollar will remain strong, and the high valuations in the US market can be sustained. Betting against the US has certainly been the wrong strategy for the past decade. However, it feels like an increasing risk and some strategic diversification is a sensible option.

Generally, the traditional approach is to have a good mix of assets and to mirror the spread of capital around the world. As the US is about 70% of leading global indices, your portfolio is certainly not out of kilter. The question for you is whether you want to make an active call and intentionally hold less than the average in the US. This is your decision, but we hope the factors above help you to decide. Trying to time the market and second-guess winning regions and sectors is pretty hard to get right, and no one has the perfect crystal ball.

The information on this page is for general guidance only and does not constitute personal financial advice. The value of investments can go down as well as up, and you may get back less than you invest. Past performance is not a guide to future performance. Tax rules can change and their effects depend on your individual circumstances. If you are unsure about the suitability of any investment for your personal situation, you should seek advice from a qualified financial adviser.

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[1] Fiscaldata

[2] Pimco, April 2025

[3] MSCI ACWI USD