St. James’s Place has warned that the US equity market has reached its highest level of concentration in 60 years, with two-thirds of global equities now based in the US and just ten mega-cap stocks accounting for more than a third of the benchmark index. The firm said the trend increases systemic risk and reinforces the case for broader geographic diversification.
In its July 2025 CIO Quarterly Insights, “Red Caps and the US Concentration Conundrum”, authored by Chief Investment Officer for Asia and the Middle East Angelina Lai, the FTSE-listed wealth manager reiterated its long-standing underweight position in US equities, holding about 15% less than market weight in its core portfolios.
The US remains its largest equity allocation, but Lai said higher valuations and the concentration of market gains make it difficult to justify additional exposure without a change in risk appetite.
The firm continues to see opportunities in Europe, Japan and emerging markets, with Asia and undervalued developing economies identified as areas for growth. Lai said this positioning is particularly relevant for Middle East investors who are expanding their international portfolios and seeking a balance between regional opportunities and global risks.
The report also pointed to volatility from US policy changes under the Trump administration, including tariff measures that the IMF estimates could reduce global GDP growth by 0.5% next year. Other risks cited include tensions in the Middle East and the war in Ukraine, both of which have implications for energy markets and supply chains.
St. James’s Place manages $245 billion in assets for more than one million clients worldwide and issues its CIO Insights each quarter to outline global macroeconomic developments and portfolio positioning.
