Highlights: Are you concerned about the 'US-ification' of your investment portfolio? If so, you're not alone. With US Big Tech driving valuations higher in 2025, allocations to US equities in developed market indices have exceeded the 70 per cent mark. The news flow on the circularity of Al funding deals in US Big Tech isn't helping investor angst either. We continue to like both US equities and US tech given their underlying fundamentals, but, notwithstanding our continued optimism, there are some very valid investor concerns which need to be addressed: 1.) The rising US assets' dominance in benchmark driven global portfolios. 2.) Within this big US equities' block, a high concentration of Mag-7 is alarming for some. 3.) US equity valuations look stretched on some measures (though not so much on others). & 4.) To top it all, currency risk has risen in unhedged multi-asset portfolios of non-US investors, driven by the Dollar weakness in 2025.

So, should investors remain invested in US stocks? We think they should 'Participate but Protect'. Whilst sudden pullbacks cannot be ruled out, Al driven productivity gains, double digit earnings growth, and the Fed's easing are still some key upside catalysts. We believe US concentration is not an issue per seas fundamentals are healthy. Hence, we prefer to look at what could be the risks and address those instead. Here are five steps investors could take to participate in the markets, whilst protecting against any risks:

a.) Diversify sector and style allocations within the S&P500, because investors' concern about 'US-ification' is as much a sector and style concentration issue as a geographical issue. The Al trade is broadening beyond Mag-7, and is permeating into other sectors like financials, industrials and utilities - the second order beneficiaries of Al's productivity lift-off and persistent energy demand. Such sectoral diversification also counteracts the ‘growth’ tilt of Big Tech by adding some ‘value’ style to the portfolio, providing portfolio ballasts that support more resilient portfolio management and protect against downside risks.

b.) Allocating to Investment Grade bonds over US Treasuries, to address US deficits related concerns, as quality corporates' finances are in a relatively better shape

c.) Allocating to Emerging Market equities and EM debt, to reduce the concern over high US valuations or the US cycle: EM assets offer lower valuations, good fundamentals and policy tailwinds. China tech provides Al exposure but at much cheaper valuations versus the US

d.) Allocating to real assets like gold acts as a hedge against Dollar-debasement concerns, whilst benefitting from strong central banks' demand that appears structural in nature

e.) And finally, by incorporating currency hedging/FX diversification in multi-asset portfolios to hedge against a weaker dollar and any potential De-Dollarisation risks over the long run

With this five-factor framework that 'Diversifies the Diversifiers', investors should be able to hedge against the underlying concerns people may have around US assets' dominance, aka, the 'US-ification' of their portfolios, whilst benefitting from US opportunities.