Staying balanced in an unbalanced market: MyFolio US positioning

Over the years, that backdrop has shaped how we position our portfolios, always deliberately, always with diversification front of mind. 

A more concentrated US market than ever

A theme we touched on during last year’s MyFolio webcasts was just how top‑heavy the US had become. A year on, that concentration remains elevated.

The Magnificent Seven alone represent around 34% of the S&P 500 [1]. To put that in perspective: these seven companies now have a combined market value that rivals, and in several cases surpasses, the GDP of major global economies. Nvidia recently surpassed the total market cap of MSCI Japan. As of the end of January, the Magnificent Seven group represented 21% of the MSCI AC World Index; larger than the entire UK, Emerging Markets, Developed Asia and Japanese allocations combined [2]. 

So, while the index may look strong, it’s increasingly reliant on a handful of companies. And as any seasoned investor knows, leadership can change abruptly. 

Our philosophy through time: discipline over fashion

Markets change; our philosophy hasn’t. We’ve stuck to the same principles through every cycle: diversify globally, stay disciplined, and resist the temptation to chase what worked yesterday.

Our dynamic strategic asset allocation process, guided by 10‑year expected returns, keeps portfolios balanced across regions, sectors and styles. Keeping our disciplined focus on long term outcomes means our US allocation reflects long‑term value, not short‑term trends.

How we’ve strengthened diversification in our active MyFolio ranges

In our fully active ranges, we’ve worked hard in recent years to ensure we remain both balanced and forward‑looking.

We’ve retained our high‑conviction active managers, those who build portfolios based on research and genuine insight, not index weightings. At the same time, we’ve increased our passive and enhanced passive exposure to around a third of our US equity exposure. This blend gives us a solid, cost‑efficient foundation while still allowing conviction to drive meaningful differentiation.

The result? Across our active ranges, we hold roughly half the index’s weighting to the Magnificent Seven. That’s deliberate. We want exposure to leading companies, but not an over‑reliance on them, especially when they make up more than a third of the index.

We’ve also kept meaningful exposure further down the market‑cap spectrum. Our US small‑cap holding and our mid‑ and smaller‑cap tilt are both benefiting from the broadening we’re now seeing in equity markets. 

After a long period of patience, these positions are starting to pay off and we’re glad we maintained our conviction, especially when valuations are so attractive on a relative basis.  

Maintaining resilience in our Core portfolios

Our hybrid Core portfolios, which include a higher allocation to passives, follow the same philosophy. We’ve ensured they’re not fully exposed to the fortunes of a tiny group of mega‑cap names. To support this, we introduced an equally weighted S&P 500 tracker in the first half of last year, providing a direct counterbalance to cap‑weighted concentration.

This has already proven valuable as leadership begins to rotate. The equal‑weight exposure is performing well in the current environment, reinforcing why diversified structures matter, particularly when the top seven stocks dominate headlines and flows.

Ensuring diversification in our fully passive range

In our fully passive range what matters is how that exposure fits within the overall portfolio. Our weighting to the US is around 32% of growth assets, compared with a North American weighting of roughly 66% in the MSCI AC World Index [2]. This has provided both greater asset class diversification and a lower reliance on the fortunes of the mega cap Magnificent Seven. 

A five year track record that speaks for itself

Diversification is also showing up in our outcomes. Our MyFolio funds have demonstrated encouraging performance versus respective EAA (Europe, Asia, and South Africa) peer groups over five years. We believe this is a clear demonstration of the value of balanced portfolio construction, even in a market dominated by a handful of mega‑caps. To see how the MyFolio ranges have performed, visit our Lookthrough reports page or access fund factsheets via our fund centre.

Why this matters for clients

Clients don’t want portfolios that behave like momentum trades. They want resilience, clarity and a strategy that does the hard work of risk management for them. Our approach - combining regional diversification, balanced US exposure, high‑conviction managers, a meaningful passive core and deliberate small/mid‑cap allocations - is built for exactly that.

Whether market breadth continues to improve or large‑cap dominance persists, diversification gives clients the best chance of staying invested with confidence.

The next chapter

Markets will continue to evolve. Concentration cycles will ebb and flow. But our job remains the same: to keep our focus on long-term outcomes, creating balanced portfolios, intentional and genuinely diversified - so clients don’t have to think about what’s driving the index this month.

And as this latest turn in the market shows, disciplined diversification doesn’t just smooth the journey; sometimes, it rewards patience at exactly the right moment.

More about MyFolio

For more information about the MyFolio fund family, visit our website or speak to your local business development director.