A 3-minute guide to US equities: How much is too much US?

If you’re just starting your investment journey, you’ve probably heard a lot about US equities. From Apple to Amazon, Microsoft to Meta, American companies dominate headlines, stock indices, and quite possibly your investment portfolio. 

But how much exposure is too much? Is your portfolio too reliant on the US? Let’s break it down.

What are US equities?

In simple terms, US equities are shares of companies listed on American stock exchanges, like the New York Stock Exchange (NYSE) or the Nasdaq. When you buy a US equity, you’re buying a slice of ownership in a US-based company.

These equities are often seen as the crown jewels of global investing. The US is home to many of the world’s most valuable and innovative firms, particularly in the technology, consumer, and healthcare sectors. It’s no surprise that many global funds, even those branded as ‘diversified’, have a big chunk allocated to the US.

Why are US equities so popular?

There are several reasons; here we break down the big ones:

1. Strong long-term returns: The US stock market, particularly the S&P 500 index, has delivered solid long-term growth over decades. Historically, it’s been one of the most reliable wealth builders.
2. Global brands: Many of the companies headquartered in the US operate across the world. Think Coca-Cola or Apple – these aren’t just American companies; they’re global powerhouses.
3. Innovation and tech leadership: The US has led the way in innovation. The ‘Magnificent Seven’ (Apple, Amazon, Alphabet, Microsoft, Meta, Nvidia, and Tesla) have driven much of the market’s recent gains.

So what’s the issue?

If the US is so dominant, why question how much exposure you have? Here’s why: because too much of a good thing can be risky.

• Is global bias the new home bias?: Investors often have a “home bias”, or a tendency to overweight stocks from their own country. But increasingly, UK investors now suffer from a kind of “global bias” that’s really just a US bias in disguise. Many global equity funds have 60–70% of their portfolio in US companies. Add in any US funds you hold separately, and suddenly your entire portfolio could be relying on the fortunes of one economy.
• Lack of diversification: A diversified portfolio spreads risk across countries, sectors, and currencies. If your portfolio is heavily US-focused, you might be overexposed to: the US dollar (currency risk); US interest rate decisions (monetary policy risk); or US consumer behaviour and economic cycles. This concentration makes your investments more vulnerable to shocks in one region—no matter how strong it looks today.
• Valuation risks: US equities, particularly large-cap growth stocks, are expensive by historical standards. However, investors are willing to pay a premium for the perceived stability and growth of US tech giants. But high valuations can also mean lower future returns. Think of it like buying a house in a trendy neighbourhood: the more popular it is, the more expensive it gets and the harder it is to find a bargain.

How much US is “too much”?

There’s no one-size-fits-all answer, but here are a few things to consider when evaluating your portfolio:

• Market-cap weighting: The US makes up roughly 70% of the MSCI World Index, which tracks developed-market stocks. So if you own a passive global equity fund (like an ETF), chances are 70p of every £1 you invest is already in the US.
• Geographic balance: Some suggest keeping US exposure closer to 50% of your total equity allocation, depending on your goals, time horizon, and risk tolerance. That leaves room for: Europe, Asia and emerging markets and UK equities, which are currently under-owned but offer attractive dividends and valuations. We discuss this trend more in a recent episode of the Investing on the go podcast. 
• Purpose of each fund: It’s also worth checking what role each fund plays in your portfolio. A global fund, a technology fund, and a US equity fund might all own Apple. If you’re not careful, you could be tripling up on the same exposure without realising it.

What can you do if you’re overexposed?

You don’t need to panic, but consider taking these steps:

1. Rebalance: Rebalancing means adjusting your holdings to bring them back in line with your target asset allocation. If the US now makes up more than you’re comfortable with, consider reducing exposure and adding to underrepresented areas.
2. Diversify: Look at regional funds, like Asia Pacific or European equity funds, to round out your portfolio. Some actively-managed global funds are more balanced geographically. Bertrand Cliquet, co-manager on the Lazard Global Equity Franchise fund, for example, has a significant underweight to the US.

3. Review regularly: Markets shift, it’s natural. What started as a balanced portfolio may drift toward a US-heavy position over time, especially during strong US bull markets. A yearly review can help keep things in check.

A few final thoughts…

It’s about balance, not avoidance.

The US is a vital part of global investing: it’s dynamic, innovative, and often a key driver of returns. But like any strong performer, it shouldn’t dominate your entire line-up. Think of your portfolio like a football team: the US might be your star striker but you still need defenders, midfielders, and a solid goalkeeper. A balanced team wins in the long run.

So, how much US is too much?

The answer lies in your goals, your risk tolerance, and how much exposure you’re comfortable having to a single economy. For many investors, a well-diversified global approach with a watchful eye on US concentration is the sweet spot.