This month’s chart highlights why a home bias could be counter-productive for UK investors given the continued underlying strength of US companies.
When it comes to multi-asset investing, whether a multi-asset portfolio displays a home bias – the tendency to favour domestic assets over international ones – can be a defining factor which can shape long-term outcomes.
Here in the UK, our domestic market accounts for just 3.4 per cent of the total value of all publicly-traded stocks worldwide (known as global market capitalisation), while the US accounts for around 65 per cent.
However, portfolios from the Investment Association (IA) Mixed Investment sectors have around a quarter of their assets invested in UK shares and bonds on average.
This imbalance raises an important question: are investors missing out by staying too close to home and not embracing a global asset allocation approach based on market cap?
Figure 1: US versus UK annual revenues in 2024 ($bn)
Note: The data shows the Trailing 12 months (TTM).
Source: Aviva Investors, Bloomberg. Data as of July 2025.
Figure 1 compares the annual revenues of the top ten companies in the S&P 500 versus the top ten in the FTSE 100. The result is striking: a seven-fold difference. Only one UK company, Shell, would make it into the US top ten by 2024 revenue.
This matters because revenue is a proxy for market leadership. Since the Global Financial Crisis, the US market has consistently outperformed the UK, driven by strong revenue growth. While US valuations may appear stretched, revenues have generally kept pace, reinforcing long-term performance.
The Magnificent Seven have repeatedly outpaced analyst expectations, even in turbulent times
Although size and scale have been drivers of the dominance of US megacaps, particularly the so-called “Magnificent Seven” (Apple, Microsoft, Amazon, Alphabet, Meta, Nvidia, and Tesla), there is another key factor at play.
These US-listed firms have repeatedly outpaced analyst expectations, even in turbulent times. Their reach is global, their income streams diversified, and their innovation relentless.
It’s no surprise that some of the UK’s prominent companies, like Arm Holdings and Deliveroo, have opted to list in the US, seeking deeper capital markets and broader investor bases.
This trend underscores a key risk: underweighting the US in favour of a UK-heavy allocation could compromise long-term growth. The scale, global reach, and earnings power of US companies has proven unchallenged in recent years and continues to surprise on the upside.
We believe that multi-asset portfolios with a global allocation aligned to global market capitalisation offer broader diversification and stronger long-term growth potential than those with a UK home bias. In a world where capital flows and innovation are borderless, portfolios should be too.
