Advisors go home as U.S. equity bias deepens

Fidelity reviewed 5,579 advisor portfolios in the first half of 2026 and found a rotation with one clear direction: home, as U.S. equities rose from 77% of the equity sleeve in the first quarter to 79% in the second and international stocks fell from 23% to 21%, a shift sharp enough that 27% of the books now hold no international equities at all. Mayank Goradia, head of portfolio construction at Fidelity and CIO of Fidelity Institutional Wealth Advisors, called that a “huge home country bias” in a webinar reported by Financial Advisor Magazine.

Total risk barely moved, with average equity allocations staying around 72% and fixed income near 23%, a level Goradia said sits at the low end of the range observed over the past two years. Many had expected portfolios to become meaningfully more defensive, he noted, given political uncertainty, evolving inflation expectations, real volatility, and periodic swings around AI-related investments. What he saw instead was repositioning: advisors holding risk and moving it around.

The repositioning shows up in the sub-sleeves, with high-yield exposure falling from 19% of fixed income to 17% and pushing investment-grade up to 83%, while duration shortened to 4.38 years from 4.71. The average allocation to index funds rose to about 42%, up from 39% in the first quarter and roughly 30% over the prior two years, and Fidelity described advisors using liquid alternatives to hedge portfolios and broadening diversification with multi-sector fixed income.

Those pieces add up to a portfolio more concentrated than the steady 72% equity headline suggests: equities at 72% with 79% of that in U.S. names leaves roughly 57% of total assets in one country's stock market, a 23% fixed-income sleeve serving as the main counterweight, with liquid alternatives layered in. That is a home-country bet with a bond hedge, not a diversified global portfolio.

Asked whether the 60/40 portfolio is dead, Goradia said no, the framework is being upgraded and renovated, partly because of the inflation experience of 2022, when investors learned that stocks and bonds can decline together when inflation becomes the dominant risk. He said advisors are broadening the sources of diversification inside the portfolio. The survey supports that framing with one caveat: the renovations are cosmetic—two points out of high yield and a third of a year off duration do not change the load-bearing wall, and the equity sleeve still leads, more U.S.-centric than it was in the first quarter.

The published snapshot leaves unanswered whether the 27% of books with no international equities are concentrated among particular account sizes, advisor models, or custodians. The broader move is consistent enough to matter—U.S. weightings rose, international fell, index funds gained, and duration shortened—and each shift is small, but together they describe a portfolio pulling risk toward the home market and toward products that can be traded in an afternoon.

For Fidelity, the snapshot doubles as a product map. PWD has reported how Fidelity's rate hike turned custody into a financing war, and the allocation data shows where the next fee pools sit. The push into index funds and ETFs favors custodians with efficient trading rails; liquid alternatives and multi-sector bond funds land in the managed-account and model-delivery machinery that a custodian controls. In the broader alternatives channel, mid-sized RIAs are now the new buyers, and the Fidelity data suggests the same demand is reaching the liquid end of portfolios.

International allocations have fallen from 27% of the sleeve in 2021 to 21% today, a five-year slide that 2026's volatility did not reverse, and 27% of portfolios now hold no international equity at all. Goradia calls it a huge home-country bias. The number to watch is 27%.