Vegemite or peanut butter jelly? Why US shares will beat the ASX (again) in 2026

Two countries, two very different breakfast loyalties. 

Vegemite in Australia and peanut butter & jelly in the US. Both have their merits, and preferences come down to taste. But when it comes to building long term wealth, the choice isn’t subjective. For genuine growth in a portfolio, global exposure, particularly US equities, has been nonnegotiable.

Over the past decade, US equities have consistently outperformed Australian shares. The ASX has been dominated by cyclical banks and resources such as CBA and BHP, while US indices have been driven by structural growth leaders like Microsoft, Amazon, and Alphabet.

A tale of two markets

The US market’s outperformance isn’t accidental. It is the product of structural innovation, scale, and global reach.

Mega-cap dominance: The top 10 US stocks in terms of market cap have contributed over 50% of total 2025 returns. While the top 10 ASX 200 stocks contributed just 33%, despite making up a larger share of the index.

Global growth engines: AI, cloud, ecommerce, semiconductors are overwhelmingly led by US firms. The ASX 200 remains concentrated in domestic sectors, especially financials.

Revenue diversification: US companies derive around 50% of revenue from outside the US, compared to c. 35% for ASX firms, whose offshore exposure is heavily skewed toward mining.

Strong fundamentals: Higher ROIC, disciplined capital allocation, and robust cash flow support valuations even when multiples appear elevated.

Meanwhile, the ASX 200’s heavy tilt towards banks and commodities means earnings are more cyclical. These sectors generate cash, but lack the structural growth tailwinds needed to compound returns over time.

Australian companies have also struggled to innovate and penetrate global markets at the same pace as US firms. This has limited earnings diversification and made growth more dependent on commodity cycles.

Why 2026 Favors US Equities

Next year is shaping up to be another risk on environment, with multiple tailwinds favouring US equities:

• AI adoption goes mainstream: In 2026, enterprises move from pilots to production. AI agents, automation, and enterprise AI platforms will start to monetise and improve productivity. Driving revenue and margins.
• Global growth and fiscal support: While inflation and rates remain a concern, accommodative policy and government led capex in the US will support spending and economic growth.
• Platform leadership pays off: US mega caps don’t just innovate, they control the platforms the global economy runs on. From cloud infrastructure to app ecosystems, these companies capture disproportionate profit pools.
• Structural advantages: AI adoption is constrained by compute, power, and talent availability. This protects pricing power and reduces the risk of oversupply.

How to Gain Exposure to US equities

For Australian investors, ASX listed ETFs offer simple and transparent access to the US growth story:

• ETFS Magnificent 7 Plus ETF (HUGE): Concentrated exposure to the 10 largest Nasdaq stocks.
• ETFS US Technology ETF (WWWW): Broader technology exposure across semiconductors, cloud, networking, and data centre infrastructure.
• ETFS US Quality ETF (BEST): Focuses on high quality US companies with strong cashflow and profitability, blending growth with resilience.