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

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

or the FTSE World, for example – will find they have a big chunk of their holdings in the US. This runs to over 70% in the case of the MSCI World.

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

is up 367%. To put that in context, the FTSE 100 is up just 143%. However, as you rightly point out, the US is dealing with a huge debt problem - $39 trillion and counting[1], more than 10x that of the UK. This could weigh on its currency, even if, for the time being, the Dollar has been relatively resilient.

Asset management group Pimco recently pointed out:

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

. The focus on the US somewhat overlooks the fact that a lot of exciting technology innovation is happening in emerging markets too. Asian markets are home to crucial semiconductor manufacturing, without which none of these AI models can run. China has its own AI infrastructure development, which investors can buy into at a fraction of the price of their US equivalents.

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

in with your Vanguard holdings. In particular, a global value fund or a global dividend fund is likely to have far less in the US. Managers will be sensitive to valuation, which naturally excludes many of the technology giants. This can help bring some balance to your long-term investments. Funds to look at might include Ranmore Global Equity, Schroder Global Recovery, Orbis Global Equity, or, for a UK option, Fidelity Special Situations or TM Redwheel UK Equity Income.

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.

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