For the last 10 years, the US has dominated global equity returns. That’s not controversial, and it explains why broad global indexes are now heavily US-weighted. Today the United States is 72% of the MSCI World index (developed markets only) and 65% of the broader MSCI ACWI (developed + emerging). 

But good investors separate what has worked from what’s likely to work next. Three points of evidence are worth weighing before you simply accept a 70% US allocation for the next 10 years:

1) Starting valuations matter for long-run returns

Decades of research show that higher starting valuations (e.g., Shiller CAPE and related measures) are associated with lower expected returns over 10-year horizons. Current valuation gauges for the US remain elevated by history, which pushes return expectations down. Vanguard’s latest 10-year outlook places US equities below their long-term averages and below many non-US markets. 

2) Concentration risk is unusually high

Market-cap indices have become top-heavy. The “Magnificent Seven” are roughly a third of the S&P 500’s market cap, near modern extremes, so a passive “global” portfolio is more sensitive to a handful of mega-caps than at any time in decades. High concentration increases the range of potential outcomes. 

3) There are cheaper—and innovative—opportunities beyond US mega-caps

Valuation spreads are wide. Several credible sources point to more attractive starting points in developed ex-US and emerging markets, and within the US in value and small/mid-caps (which have lagged and now trade at discounts vs. US large-cap growth). 

Emerging markets are not mere imitators; they include global leaders integral to AI and semiconductor supply chains. For example, TSMC, the world’s leading foundry, accounts for 11% of MSCI EM and recently held 71% share of the pure-play foundry market. That’s hardly peripheral to the next decade of innovation. 

So… would I want 70% in the US for the next decade?

On the evidence, probably not, at least not by default. A global market-cap tracker today bakes in high US valuations and high concentration. That doesn’t mean “sell the US” (far from it), but it does argue for thoughtful diversification:

• Keep strategic US exposure, tilting toward reasonably priced segments (US value, quality small/mid).
• Rebalance rather than chase winners, especially when leadership is narrow.
• Consider boosting developed ex-US and EM allocations where valuations are less stretched. 

Past winners don’t have to be future winners. The discipline is to diversify, rebalance, and let prices/valuations guide incremental tilts—without trying to call the exact top of any theme.

Disclaimer

The information in this article is provided for general insight and educational purposes only and does not constitute financial advice or a personal recommendation. Money Wise UK® is not authorised or regulated by the Financial Conduct Authority (FCA).

Investment values can fall as well as rise, and past performance is not a reliable indicator of future results. Always carry out your own research and seek independent financial advice before making any investment or financial planning decisions.