Anti US bias world index funds

bathblue

I've been thinking recently about world index trackers, and the fact that the US big 7 stocks (Apple, Microsoft, Amazon, Alphabet, Meta, Nvidia, and Tesla) make up the best part of 20% of the index, and the US at >50% of the index.

What are people thoughts on Multi Asset 80+ Equity funds / Multi index funds (basically world index funds) that have an anti US bias.

i.e.

abrdn MyFolio Market V

1. UK Equities 28.9%
2. US Equities 28.3%
3. European Equities 11.1%
4. Asia Pacific Equities 11.0%
5. Emerging Market Equities 7.3%
6. Japan Equities 5.2%
7. Infrastructure 3.2%
8. Global REITS 3.2%
9. Other 1.9%

VT AJ Bell Adventurous

1. UK equity 24.87%
2. Emerging markets equity 24.63%
3. North America equity 20.17%
4. Europe ex-UK equity 6.84%
5. Japan equity 6.04%
6. Asia Pacific ex-Japan equity 1.95%
7. International bonds 10.01%
8. Property 3.02%

Would investing in these kind of funds long side a global index tracker, help to de-risk any of the US big 7 stocks having a big fall like Tesla has recently.

Is there any benefit "trading against the market"?

eskbanker

Why would you hold one of those alongside a global index tracker, surely that would just dilute the effect?

Hoenir

Which market are you referring too? Indices are man made constructed benchmarks.   Where a Company holds it's primary share listing may have little relevance as to where it conducts it's business. Bias often arises from miscomprehension.  Likewise currency exposure can magnify both gains and losses. 

SVaz

If/when the US ceases to be the largest percentage of a World index tracker ( can’t see it happening any time soon tbh) then won’t that tracker automatically readjust ? 

Rich1976

The US makes up about 70% of a global index tracker now rather than 50%. It is something I have been thinking about myself recently and whilst I don’t invest myself in global trackers, I do use multi asset funds such as the ones from HSBC and my work pension both of which have approximately 60% in the US.

whilst performance has been very good compared to the ones with a lower US equity should we just accept an ever increasing bias towards the US a becoming an ever bigger part of the world markets and the dominance of that awful man in charge having such control over everything?

eskbanker

Rich1976 said:

whilst performance has been very good compared to the ones with a lower US equity should we just accept an ever increasing bias towards the US a becoming an ever bigger part of the world markets and the dominance of that awful man in charge having such control over everything?

It's not really a question of what we should do, it's entirely up to the individual to make their own decisions!

Many will be happy to let cap-weighting do its natural thing, but it's also perfectly valid for others to take the active decision to adjust allocations, either according to their own political/economic opinions or just to minimise concentration risk.

bathblue

@eskbanker - I'm thinking of diluting the US indexes. This could be done by purchasing separate region index trackers. However, the Aberdeen and AJ Bell funds seem an easier way of changing the region mix.

@Hoenir - Good point on Company share listing having little relevance as to where it conducts it's business. Just exploring whether there is any benefit of using multi index funds that have a different bias relating to the US indices. Aberdeen and AJ Bell have created these multi index funds, therefore they must think that there is a market for them.

eskbanker

bathblue said:

@eskbanker - I'm thinking of diluting the US indexes. This could be done by purchasing separate region index trackers. However, the Aberdeen and AJ Bell funds seem an easier way of changing the region mix.

Sure - my point was really that if you have a desired allocation in mind, then see if there's a single product that fits, rather than specifically looking for a second one to sit alongside a cap-weighted tracker.

Hoenir

Rich1976 said:

The US makes up about 70% of a global index tracker now rather than 50%. 

At the peak of the Nikkei.  Japan represented some 40% and the US 30% of world markets.  The global share of GDP for the US is around 25%. 

Remember also global index trackers are weighted on a company's freefloat not the full market capitalisation. 

Albermarle

I'm thinking of diluting the US indexes. This could be done by purchasing separate region index trackers. However, the Aberdeen and AJ Bell funds seem an easier way of changing the region mix.

That would be one way, although both have perhaps gone a bit too far in diluting the US%.

Sunnylifeover50plan

Would anyone be wise to bet against the US?