IFAs on average allocate to US equities
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Foreword from Michael Browne
Michael Browne
Investment Strategist
In the ever-evolving landscape of global markets, the resilience and appeal of US equities continue to captivate the attention of UK investors. This survey of 200 UK IFAs reveals a striking trend: two-thirds (64%) are recommending their clients to either maintain (50%) or increase (14%) their allocations to US equities.
This advice comes despite the increased bouts of volatility following the US administration’s tariff policy, particularly the impact of ‘Liberation Day’ tariffs. They are looking beyond the short-term market fluctuations and recognising the enduring strength of the US economy.
It would appear that while tariffs may have shifted trade dynamics, markets knew this was coming and have largely priced this in. The initial volatility from the new tariffs has passed and US markets are again testing all-time highs. History shows us that the US often absorbs trade shocks and recovers quickly, thanks to its fundamental structural growth, continuous innovation and strong corporate earnings.
We partnered with Opinium research to create this survey which targeted 200 UK-based IFAs between 13th and 24th June 2025. We hope this report will serve to create a clear and informed view of the current investment landscape.
Current allocations
With continued turbulence and uncertainty within the US markets, IFAs are on average allocating 23.6% to US equities within their clients’ portfolios. This average drops to 21.6% among those IFAs working under an appointed representative regulatory status. Almost half (45%) are currently allocating 10% to 25% of their clients’ portfolios to US equities. However, over one in three (36%) say they are allocating more than 25% to US equities.
23.6%
53%
US mid-cap stocks are favoured by of IFAs
74%
Sustainability options remain niche of IFAs do NOT consider ESG factors in thier US allocations
Best opportunities
Style
When looking at investment style, there is a close split between those who think the biggest opportunities for investors in US equity markets lie in growth (46%) and those who think it is value investments (44%). One in ten (11%) believe income investments present the biggest opportunity.
US equity market: style choices
46%
growth
44%
value
11%
income
Market cap
Looking at market cap size preferences within the US equity markets, mid-cap investments are favoured by over half of IFAs (53%), with an even split of 24% for both small-cap and large-cap. Interestingly, those at firms with AUMs of £100 million or more are much more likely to favour mid-cap (63%) compared to those at firms with AUMs under £100 million (48%).
Sustainable
Thinking about sustainable and ESG investing, three-quarters (74%) say they favour investments that do not consider ESG (environmental, social and governance) factors. However, a quarter (27%) see opportunity in ESG and sustainable investing, with 14% favouring sustainable or impact-related investments and 13% preferring ESG investments.
Active beats passive: 68% vs. 32%
Finally, looking at management style, over two-thirds (68%) say they favour active management and see it as the biggest opportunity for investors in US equity markets over the next 12 months. Alternatively, a third (32%) believe passive management presents the biggest opportunities.
Liberation Day and the impact of volatility
For three in five (60%), the Liberation Day tariffs have influenced how they approach current asset allocation with their clients. Among those affected by the new tariffs, over a fifth (22%) have diversified further into non-US international markets, while just under a fifth (18%) have shifted their focus towards UK or domestic assets.
Around one in six (16%) have increased allocations to actively managed strategies, and a further 15% have increased their allocation to alternative assets as a hedge against volatility. One in ten (10%) have either moved assets into defensive or lower-risk holdings or have rebalanced portfolios to reduce exposure to tariff-affected sectors.
Finally, just under one in ten (9%) have said they will be increasing their allocation to US assets. This highlights the range of strategies advisers are using in response to the Liberation Day tariffs.
How Liberation Day tariffs influenced approach to asset allocation with clients
Active vs. passive
For a third (33%), the recent volatility in the stock markets has increased the likelihood of recommending active management solutions over passive when advising on US equity investments. On the other hand, just 6% say it has decreased the likelihood of recommending active products. For the majority (62%), however, the volatile stock markets have neither increased nor decreased the likelihood of recommending active over passive.
Diversification
Given the recent domination of the “Magnificent Seven” in US equities, a third (33%) of IFAs are now seeking broader diversification through increased allocation to other sectors. A further one in ten (10%) are actively reducing exposure to large-cap US tech. However, over a quarter (27%) say they are maintaining their current exposure, rising to over a third (34%) among those with directly authorised regulatory status. A further 15% report no changes to their strategy, remaining confident in the long-term strength of the dominant tech companies.
Expectations for the US markets
Broadening of the market? Half of IFAs (50%) agree that the US equity rally will broaden beyond mega-cap tech in the second half of 2025. Nearly two fifths (39%) believe the ‘market broadening’ narrative is overhyped, and that mega-caps will continue to lead.
Over two fifths (44%) agree that Fed rate cuts could lead them to increase investments in small-cap and cyclical stocks, with this figure rising to 53% among those at firms managing £100 million or more. Those working in national adviser firms are even more likely to agree (62%). Just under half (45%) say they have rebalanced due to the valuation gap between US mega-caps and the rest of the market, with this rising to 57% at firms with AUMs of £100 million or more. Finally, over two fifths (42%) think small and mid-cap stocks will outperform mega-caps in H2 2025.
To what extent do you agree or disagree with the following statements?
What are investors worried about?
Just over half (51%) say that Trump administration policies and decision-making are likely to drive the greatest level of US equity market volatility over the next 12 months. Over two fifths (41%) believe that shifts in US economic policy, such as changes in trade or tariffs, will cause the highest levels of volatility. Over one in three (35%) point to rising global geopolitical risk as their biggest concern.
Around one in eight (12%) are more optimistic in their outlook and do not believe any factors will significantly drive US equity market volatility over the next 12 months.
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About the survey
Opinium surveyed 200 IFAs between the 13th–24th June 2025 through an online quantitative survey. The IFAs surveyed were from a range of types of firms including national adviser, member of a network and subscriber to service providers. Total number of assets for the firms range from £0–£1bn+. The IFAs regularly advise their clients on a range of services including personal retirement planning, personal protection, investment and savings, ISAs, OEICs, Unit trusts, Investment Trusts, taxation planning, equity release, structured investment products and mortgages.
Important information
This document is intended to be of general interest only, and does not constitute professional advice. Franklin Templeton and its management groups have exercised professional care and diligence in the collection and processing of the information in document. Franklin Templeton makes no representations or warranties with respect to the accuracy of this document. Franklin Templeton shall not be liable to any user of this report or to any other person or entity for the inaccuracy of information contained in this press release or for any errors or omissions in its contents, regardless of the cause of such inaccuracy, error or omission. Opinions expressed are the author’s at publication date and they are subject to change without prior notice. Given the rapidly changing market environment, Franklin Templeton disclaim responsibility for updating this material. Any research and analysis contained in this document has been procured by Franklin Templeton for its own purposes and is provided to you only incidentally. Investments entail risks. The value of investments and any income received from them can go down as well as up, and investors may