Do you fear a ‘Trump Slump’? We reveal how to diversify an Isa away from the US

Confidence in US markets has taken a sharp knock after years of stunning gains, as president Donald Trump’s trade wars spark fears of recession across the Atlantic.

Investing experts typically advise people to ride out economic shocks and market corrections, and avoid rejigging portfolios in response to current events.

However, they have also said for some time that the US winning streak has made many investors heavily exposed to its markets.

People invested solely in a global tracker fund fund have more than two thirds of their money tied up in the US, and much of that would be held in its most dominant tech stocks.

The so-called ‘Magnificent Seven’ of Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla have taken a battering so far this year.

We previously explained how to spring clean your investment portfolio, including rebalancing away from markets and industries which have performed well and now take up too big a percentage of your holdings.

Here we take a look at how you might diversify away from the US, to ensure it doesn’t hold too much sway over the performance of your investments at a time of geopolitical turmoil and realignment.

Jason Hollands: Chatter has shifted to a debate about a potential ‘Trump slump’ for the US economy later this year

US market moves underline importance of a well-diversified portfolio

US stocks have seen some ‘torrid’ weeks, with blood on the carpet for the Magnificent Seven, since they hit new market highs in mid February, according to Bestinvest managing director Jason Hollands.

‘Investors have taken a dim view of the uncertainty in US trade policy under the Trump administration and some of the frothy valuations in US mega-cap tech stocks have borne the brunt of this.

‘At the epicentre of the storm has been Tesla, as the firm faces idiosyncratic issues with boycotts and demonstrations as a result of Elon Musk’s prominent forays into politics across the globe.’

US markets have already been in formal ‘correction’ territory, meaning a decline of -10 per cent or more from peak, Hollands points out.

‘These moves have burst the enthusiastic talk by investors of only a few months ago about US equity market “exceptionalism”. Instead, the chatter has shifted to a debate about a potential “Trump slump” for the US economy later this year.’

But he says that although Trump’s erratic approach to tariffs and upending of alliances is causing huge disruption, it is too early to predict a US recession – and lofty valuations on US big tech names were bound to deflate at some point.

‘What recent market moves do underline is the importance of having a well-diversified portfolio,’ he says.

‘Some investors have steadily become ever more exposed to US equities in recent times and, along with this, the extreme concentration that had played out as the Mag-7 valuations ballooned.’

Hollands suggests some ways to diversify below, but adds that some comforting words from the Federal Reserve, or a tuning down of aggressive trade rhetoric could quickly help restore some calm.

‘At the moment President Trump is playing hardball, but we know from his first administration he sees the performance of the US stock market as a key scorecard for success and can’t ignore these moves.’

Darius McDermott: Many portfolios aren’t just overweight in the US but highly concentrated in a small number of companies

‘Magnificent Seven’ account for a third of S&P 500

‘Over the past decade, 92 per cent of new investments in UK-domiciled funds have poured into passive, index-tracking strategies – primarily the S&P 500 and global indices,’ says Darius McDermott, managing director of FundCalibre.

‘While this has been a winning strategy in recent years, many investors may be more exposed to the US market than they realise.’

He notes that the ‘Magnificent Seven’ now account for 37 per cent of the S&P 500’s market cap, while just five companies make up nearly 20 per cen of the MSCI World Index.

‘This means many portfolios aren’t just overweight in the US but also highly concentrated in a small number of companies. While the US remains a hub of innovation, recent market volatility has underscored the importance of diversification.’

McDermott says benchmarks are backwards looking, and by buying the index an investor is essentially buying what did well in the past.

‘If you believe we are entering a new global order, it might be time to rethink your exposure and redeploy capital into the potential winners of tomorrow.’

Gabriel May, head of treasury at Trading 212, says some of its UK customers are increasingly exploring domestic and European opportunities as they reconsider their exposure to US stocks.

‘Recent geopolitical developments have particularly boosted interest in the European defence sector, with companies such as the UK’s BAE Systems and Germany’s Rheinmetall attracting notable attention.

‘Tech and innovation hubs, particularly in artificial intelligence and data analytics, are gaining popularity.

‘Additionally, established names in aerospace, transport, and manufacturing sectors remain consistently popular.’

Gabriel May: Tech and innovation hubs, particularly in AI and data analytics, are gaining popularity

How to diversify away from the US

‘One way to achieve this while maintaining a globally diversified portfolio is through actively managed funds with a differentiated global allocation,’ says McDermott.

‘For example, Ranmore Global Equity allocates just 19 per cent of its portfolio to North American equities, compared to the index’s 75 per cent, while holding 35 per cent of the portfolio in Europe and 16 per cent in China.

‘This fund has consistently delivered top-quartile performance.’

‘Other distinct funds include Lazard Global Equity Franchise, with 37 per cent in the US, and WS Montanaro Global Select, with 47 per cent and broad diversification across large caps.

‘These funds could serve as valuable complements to a global or US tracker, offering a broader and more balanced approach to global investing.’

Ranmore Global Equity (Ongoing charge: 1.00 per cent)

Lazard Global Equity Franchise (Ongoing charge: 0.81 per cent)

Montanaro Global Select (Ongoing charge: 0.9 per cent)

Hollands says investors who are worried about being over exposed to big US tech stocks could consider an equally-weighted tracker as an alternative route to accessing US equities.

He suggests the Xtrackers S&P 500 Equal Weight UCITS ETF, or a fund that weights US companies based on fundamental factors like the Invesco FTSE RAFI 1000 ETF.

Hollands says the latter owns the 1,000 largest US listed companies but weights them based on book value, cash flow, sales and dividends rather than market cap.

He adds: ‘With investors contemplating end of tax year choices for their Isas, it could be time to consider some of the markets they may have overlooked in recent years as such as emerging markets, Europe and even the unloved UK.’ His tips in these areas are below.

S&P 500 Equal Weight UCITS ETF (Ongoing charge: 0.20 per cent)

Invesco FTSE RAFI 1000 ETF (Ongoing charge: 0.39 per cent)

Templeton Emerging Markets Investment Trust (Ongoing charge: 1.06 per cent)

Liontrust European Dynamic (Ongoing charge: 0.85 per cent)

Fidelity European Trust (Ongoing charge: 0.77 per cent)

Artemis UK Select (Ongoing charge: 1.27 per cent)

Temple Bar Investment Trust (Ongoing charge: 0.56 per cent)

Compare the best DIY investing platforms and stocks & shares Isas

Investing online is simple, cheap and can be done from your computer, tablet or phone at a time and place that suits you.

When it comes to choosing a DIY investing platform, stocks & shares Isa or a general investing account, the range of options might seem overwhelming. 

Every provider has a slightly different offering, charging more or less for trading or holding shares and giving access to a different range of stocks, funds and investment trusts. 

When weighing up the right one for you, it’s important to to look at the service that it offers, along with administration charges and dealing fees, plus any other extra costs.

To help you compare the best investment accounts, we’ve crunched the facts and pulled together a comprehensive guide to choosing the best and cheapest investing account for you. 

We highlight the main players in the table below but would advise doing your own research and considering the points in our full guide linked here.

>> This is Money’s full guide to the best investing platforms and Isas 

Platforms featured below are independently selected by This is Money’s specialist journalists. If you open an account using links which have an asterisk, This is Money will earn an affiliate commission. We do not allow this to affect our editorial independence. 

DIY INVESTING PLATFORMS AND STOCKS & SHARES ISAS 

	Admin charge	Charges notes	Fund dealing	Standard share, trust, ETF dealing	Regular investing	Dividend reinvestment
AJ Bell*	0.25%	Max £3.50 per month for shares, trusts, ETFs.	£1.50	£5	£1.50	£1.50 per deal	More details
Bestinvest	0.40% (0.2% for ready made portfolios)	Account fee cut to 0.2% for ready made investments	Free	£4.95	Free for funds	Free for income funds	More details
Charles Stanley Direct*	0.35%	No platform fee on shares if a trade in that month and annual max of £240	Free	£11.50	n/a	n/a	More details
Etoro*	Free	Stocks, investment trusts and ETFs. Limited Isa, no Sipp.	Not available	Free	n/a	n/a	More details
Fidelity*	0.35% on funds	£7.50 per month up to £25,000 or 0.35% with regular savings plan.	Free	£7.50	Free funds £1.50 shares, trusts ETFs	£1.50	More details
Freetrade*	Basic account free,  Standard with Isa £5.99, Plus £11.99	Stocks, investment trusts and ETFs.	No funds	Free	n/a	n/a	More details
Hargreaves Lansdown*	0.45%	Capped at £45 for shares, trusts, ETFs	Free	£11.95	Free	Free	More details
Interactive Investor*	£4.99 per month under £50k, £11.99 above, £10 extra for Sipp	Free trade worth £3.99 per month (does not apply to £4.99 plan)	£3.99	£3.99	Free	£0.99	More details
InvestEngine*	Free	Only ETFs. Managed service is 0.25%	Not available	Free	Free	Free	More details
iWeb	Free		£5	£5	n/a	2%, max £5	More details
Trading 212*	Free	Stocks, investment trusts and ETFs.	Not available	Free	n/a	Free	More details
Vanguard  Only Vanguard’s own products	0.15%	Only Vanguard funds	Free	Free only Vanguard ETFs	Free	n/a	More details
(Source: ThisisMoney.co.uk March 2025. Admin % charge may be levied monthly or quarterly