The Big Switch in 2026: Is your ISA missing emerging markets

Years of ISA investing may have increased your exposure to the US, just as global growth is shifting towards emerging markets. With April’s ISA deadline approaching, now could be the right time to rebalance.
 

If you’ve invested in global equities through an ISA for many years, chances are you’ve done well. US markets – particularly large technology companies – have dominated returns and driven much of the growth investors have enjoyed.

However, that success has also reshaped global indices. Today, more than 17% of the MSCI All Country World Index is made up of just five companies, all operating in the technology sector. Their strong performance has boosted portfolios, but it also means many investors are now more exposed to a small number of stocks, in a single sector, than they might realise.

This creates a form of double concentration risk: reliance not just on one area of the market, but on a handful of companies driving a disproportionate share of returns.

And when large parts of your wealth depend on the same market forces, risks can quietly build – even when performance has been strong.

As exposure to a small group of large US companies has grown, exposure elsewhere has often fallen – despite their growing importance.

Emerging markets now account for around 40% of the global economy yet they make up just 10% of global equity indices. That gap exists because indices are built on market capitalisation, not economic reality. The largest US companies dominate, while faster-growing economies are underrepresented.

According to the IMF, emerging markets drive more than 65% of global growth. Yet many long-term investors remain significantly underexposed – not through deliberate choice, but because of index concentration and years of US-led performance.

The conditions that favoured a US-heavy approach for much of the past decade are changing.

US valuations remain elevated, while rising debt, political uncertainty, and a weakening dollar present new challenges. Historically, periods of dollar weakness have tended to favour emerging markets, improving financial conditions and supporting returns.

At the same time, emerging markets have evolved. They are increasingly home to global leaders in technology, clean energy, financial services, and advanced manufacturing. Growth is being driven more by domestic demand and rising incomes, supported by stronger balance sheets and lower debt than in the past – and at valuations that remain below developed markets.

With the ISA deadline approaching, now is a natural opportunity to review your portfolio without triggering tax consequences – whether by rebalancing within existing ISAs or using this year’s allowance.

If 2026 is the year you consider making the Big Switch, it may help to ask three simple questions.

You’ve been rewarded for US exposure. The question now is whether that success has left you carrying more concentration risk than you intended – and whether increasing exposure to emerging markets could form part of a considered Big Switch.

Templeton Emerging Markets Investment Trust (TEMIT) offers a proven way to access emerging markets within a long-term portfolio.

TEMIT invests in high-quality companies across emerging economies, selected through deep, on-the-ground research and a disciplined investment approach. With a long track record and experienced management, it offers focused exposure to the markets driving the next phase of global growth.

This ISA season, reduce US concentration and increase exposure to emerging markets.
 

MSCI ACWI Index
IMF World Economic Outlook, April 2025
IMF, WEO, October 2025