Think you're globally diversified? If you own a global index fund, you could already be making a huge bet on the US market.
In partnership with Schroders:
Remember when DVDs were king?
A Video Ezy sat on practically every corner, and burning your mate a copy of a movie felt like cutting-edge tech.
Now DVDs are basically vintage, Netflix and Amazon Prime run the show while video stores live on as nostalgic TikToks.
Looking back, that shift feels obvious, but if you were standing in the DVD aisle at its peak, betting on its downfall would've sounded ridiculous.
Investing works the same way: the thing that looks unbeatable right now might not stay that way forever.
Some of the biggest companies in the US are now worth more than the entire share markets of countries like the UK or Japan.
That scale has a flow-on effect, because "global" share indexes have quietly become US-heavy.
As of April 2026, around 70% of the MSCI World Index sat in US companies alone, which means if you own a "global" index fund, there's a good chance you're way more exposed to the US than the name suggests.
After a decade of strong US returns, that might sound like a win, but bigger doesn't automatically mean better going forward.
Zoom out far enough and the picture gets a lot more interesting.
A heatmap of annual returns across major share markets over the past 35 years shows just how much the leaderboard shuffles year to year.
The US has topped the charts as the best-performing major share market in 12 of those years (impressive), but it's also finished last seven times. Now in 2026, it's sitting at the bottom of the rankings (as of April 2026).
The point is, markets move in cycles and today's star can easily become tomorrow's straggler.
The US isn't a permanent fixture at the top. Wind the clock back and emerging markets have had their winning moments. Go back even further and Japan was the market dominating throughout the 1980s.
This is where diversification means more than just "owning lots of shares."
When one market outperforms for long enough, it naturally takes up a bigger slice of global indexes, so without doing anything, investors can end up making an increasingly large bet that yesterday's winner keeps winning.
History suggests that's a risky assumption.
Rather than backing one country because it's had a great run, a genuinely diversified portfolio spreads its investments across markets where future opportunities might show up.
Nobody can call the next market to outperform, but history is pretty clear that it probably won't be the same one forever.
One example of this approach is Schroders' CORE Global Equity strategy, which looks past the headline-grabbing markets and invests across a broad universe of global companies.
Diversification here is actively managed at the stock, sector and regional level - one way of avoiding overexposure to whichever market happened to win last decade. But like any equity investment, it carries risk - capital gains and returns aren't guaranteed.
At the end of the day, no one has a crystal ball for markets, and that's exactly the point. Building a portfolio that isn't overly reliant on one country's continued dominance isn't about predicting the future, it's about being prepared for whichever future actually shows up.
This article was produced in partnership with Schroders. Before making any investment decision, you should consider seeking independent professional advice and read the relevant Product Disclosure Statement at schroders.com.au.
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