Too Much US Tech? How to Add a Value Tilt to Your Portfolio

If you own a global index fund, you own a lot of America. And if you own a lot of America, you own a lot of technology.

As of early 2026, the US makes up around 65-70% of the MSCI World index. Within the US market, the largest positions are dominated by a handful of mega-cap technology companies - Apple, Microsoft, Nvidia, Alphabet, Amazon, Meta. These companies have driven extraordinary returns over the past decade. They have also pushed US valuations to levels that, historically, have been followed by periods of underperformance.

None of this means a global index fund is a bad investment. Over the long term, owning the world is a sensible strategy. But some investors - particularly those who are uncomfortable with the concentration risk in US tech - may want to consider adding a value tilt to their portfolio.

This article explains what that means and how it works.

The Concentration Problem

The S&P 500 is a market-cap weighted index. That means the bigger a company gets, the more of the index it represents. As US tech companies have grown, they have come to dominate not just the S&P 500 but global indices too.

The result is that a "diversified" global index fund today has a surprisingly large bet on the continued success of a small number of US technology businesses.

This is not automatically a problem. Those businesses are genuinely excellent - highly profitable, growing fast, and deeply embedded in the global economy. But their valuations reflect a great deal of future optimism. Metrics like the cyclically adjusted price-to-earnings ratio (CAPE) for US equities are at elevated levels. That does not mean a crash is coming. It does mean that a significant portion of future returns may already be priced in.

What Is a Value Tilt?

Value investing is the practice of buying assets that appear cheap relative to their underlying fundamentals - earnings, book value, cash flows, dividends.

A value-tilted portfolio deliberately overweights companies that trade at lower valuations compared to the market. These tend to be companies in sectors like financials, energy, consumer staples, industrials, and utilities - sectors that are less glamorous than technology but often more reasonably priced.

Value stocks have a long historical track record. Research going back decades across multiple markets consistently shows that cheaper stocks, on average, outperform expensive ones over long time horizons - though the relationship is not reliable over any given year or even decade.

The key point for our purposes is simpler: a value-tilted fund will typically hold less US tech and more of everything else. It provides a natural counterweight to the concentration risk in a standard global tracker.

How a Value Tilt Reduces US Tech Exposure

Standard global equity indices weight companies by market capitalisation. Value indices weight by a measure of cheapness - dividend yield, price-to-book ratio, price-to-earnings ratio, or a combination.

Because the largest US tech companies are expensive by almost any valuation measure, they represent a much smaller portion of value-weighted indices than cap-weighted ones. A value ETF will typically have:

• Lower US weighting (often 40-55% rather than 65-70%)
• Lower technology sector weighting
• Higher allocations to Europe, Asia, and emerging markets
• Higher allocations to financial, energy, and industrial companies

This is not the same as betting against US tech. It is simply choosing not to be as concentrated in it as a standard tracker forces you to be.

A Note on VHYL

Vanguard's FTSE All-World High Dividend Yield ETF (VHYL) is one example of a fund that naturally provides a value tilt through its focus on dividend-paying companies.

Because it selects companies based on dividend yield, it systematically avoids high-growth, low-yield technology stocks and overweights sectors that generate and distribute consistent cash - financials, energy, consumer staples, utilities.

As of early 2026, VHYL has a significantly lower US weighting than a standard MSCI World tracker, a higher allocation to Europe and Asia, and a total ongoing charge of around 0.22% per year.

This is not a recommendation to buy VHYL or any other specific fund. Every investor's situation is different, and what works well in one portfolio may be inappropriate in another. Always consider your own goals, time horizon, and risk tolerance before making any investment decision.

What VHYL illustrates is the principle: a dividend-focused or value-tilted fund can serve as a deliberate counterweight to a standard tracker, reducing exposure to expensive US tech without requiring you to make specific sector bets.

Combining a Tracker and a Value Tilt

One practical approach is to hold both - a standard global tracker for broad market exposure and a value or dividend ETF as a complement.

For example:

• 60% in a global cap-weighted tracker (e.g. Vanguard FTSE All-World)
• 40% in a global dividend or value ETF (e.g. a high dividend yield or factor-tilted fund)

This blended approach gives you full market participation through the tracker, while the value tilt reduces the overall concentration in expensive US tech and adds a degree of geographical and sector diversification.

There is no single right ratio. The appropriate split depends on your conviction about the value premium, your existing portfolio, and your comfort with tracking error - the extent to which your portfolio diverges from the global market.

The Honest Caveat

A value tilt is not a guaranteed way to outperform a standard tracker. There have been extended periods - including much of the 2010s - where growth stocks dramatically outperformed value stocks, and investors who tilted towards value were left behind.

The argument for a value tilt is not that it will always beat the market. It is that:

1. It reduces concentration in assets that are historically expensive.
2. It maintains diversified exposure to global equities across more sectors and geographies.
3. It has historically been rewarded over very long time horizons.

If you are a long-term investor who is uncomfortable with the current concentration of global indices in a handful of US technology companies, a value tilt is a rational, evidence-based way to address that. It is not a trade. It is a structural adjustment to your portfolio that reflects a considered view of where the risks lie.

Frequently Asked Questions

What is a value tilt in investing?

A value tilt means deliberately overweighting cheap, undervalued companies in your portfolio relative to their share of the market. Rather than tracking market capitalisation (where expensive companies are the largest positions), a value-tilted fund selects stocks based on valuation metrics - low price-to-earnings ratios, low price-to-book, or high dividend yields. The result is a portfolio that holds more financials, energy, and consumer staples, and less technology, than a standard global tracker.

Does a value tilt outperform the market?

Over very long time horizons, academic research - including the work of Fama and French - consistently finds that cheaper stocks outperform more expensive ones. This is called the value premium. However, the premium is not reliable over any 5-10 year window and can disappear for extended periods, as it did in the US during the 2010s. A value tilt is a long-term structural choice, not a short-term trade.

How do I add a value tilt to my portfolio?

The simplest approach is to add a value-factor or dividend-focused ETF alongside your core global tracker. For example: 60% in a cap-weighted global tracker and 40% in a global dividend or value ETF. The dividend ETF provides a natural value tilt because it screens for yield, which systematically reduces exposure to expensive growth stocks. Factor ETFs explicitly targeting value (low P/E or P/B) are another option.

Will a value tilt definitely reduce my US tech exposure?

Yes, meaningfully. Because US technology companies are expensive by almost any valuation measure, they are underweighted in value-tilted and dividend-focused indices. A value ETF typically has 40-55% in US equities versus 65-70% in a cap-weighted global tracker. The difference is largely held in European, Asian, and emerging market equities, as well as higher allocations to financials, energy, and industrials.

Is the FTSE All-World High Dividend Yield ETF (VHYL) a value fund?

It functions as one in practice. VHYL selects stocks based on dividend yield, which systematically avoids high-growth, low-yield technology companies and overweights sectors that distribute consistent cash. This makes it behave like a value tilt even though it is technically a dividend strategy. As of early 2026, VHYL has meaningfully lower US exposure than a standard MSCI World tracker and higher allocations to European and Asian equities.

Related Reading:

• Why Dividend ETFs Can Be a Powerful Long-Term Strategy
• Write Your Investment Thesis Before the Next Market Crash
• Are Dividends Irrelevant?

Further Reading:

Smarter Investing - Tim Hale - The definitive UK guide to evidence-based investing, covering factor tilts including value in detail. If you want a rigorous framework for portfolio construction using ISAs and SIPPs, this is the book. (Affiliate link - we may earn a small commission at no extra cost to you.)

Your Complete Guide to Factor-Based Investing - Larry Swedroe & Andrew Berkin - The most thorough academic treatment of factor investing available to retail investors, covering the value premium and how to implement factor tilts in a practical portfolio. (Affiliate link - we may earn a small commission at no extra cost to you.)

The Little Book That Beats the Market - Joel Greenblatt - A highly accessible introduction to value factor investing, explaining why buying cheap, profitable companies systematically tends to outperform over time. (Affiliate link - we may earn a small commission at no extra cost to you.)