The ASX and the US market differ on sector exposure, concentration, dividends, tax treatment and currency. This guide sets out those differences with figures as at mid-2026, including the 2026 shift in US market breadth and the effect of a rising Australian dollar on unhedged US returns.
The ASX is familiar, accessible, and carries structural advantages for Australian investors. The US market is the world’s largest and has delivered stronger returns over the past decade. This guide sets out what each market offers and where each falls short.
How Are the Two Markets Structured?
Sector composition is the primary difference. Financials and materials made up 59.5% of the S&P/ASX 200 at 31 July 2026: financials 34.5% and materials 25.0%. Information technology was 2.0%. The S&P 500 carried a 37.8% weighting to information technology at 31 August 2026, with financials at 12.3%.
That gap has practical consequences. When a global theme runs through technology companies, as the AI infrastructure build-out has, an investor holding only ASX-listed stocks has close to no direct exposure to it.
Concentration runs the other way from the usual narrative. The top ten constituents represented 47.6% of the S&P/ASX 200 at 31 July 2026, with BHP at 11.3% and CBA at 10.9% accounting for roughly a fifth of the index between them. The top ten of the S&P 500 represented 37.5% on the same date. On that measure, the Australian index is the more concentrated of the two.
The Performance Gap
The Recent Record
To 31 July 2026, the S&P/ASX 200 accumulation index returned 6.0% over one year, 10.4% a year over three years and 8.0% a year over five years. The S&P 500 total return index returned 22.3% in US dollars over the year to 30 June 2026, 13.4% a year over five years and 15.5% a year over ten years.
The US dollar figures overstate what an unhedged Australian investor received. In Australian dollars, the S&P 500 Net Total Return index returned 9.2% over the year to 31 July 2026 against the ASX 200’s 6.0%. Over five years the AUD figure was 13.4% a year. The difference between 22.3% and 9.2% over the past year is currency, covered below.
A Longer View
The UBS Global Investment Returns Yearbook 2026 puts the long-run real return on US equities at 6.6% a year over the 126 years from 1900 to 2025. Australia has ranked at or near the top of the same dataset in earlier editions, and the current country table is published only in the paid full edition, so the precise current comparison is not publicly verifiable.
The long series shows leadership between markets running in multi-decade cycles. The ASX had extended periods of outperformance earlier in its history; the US has had the stronger run since the global financial crisis.
What Has Driven the US Rally
The Q2 2026 US reporting season produced the strongest headline numbers since 2021. FactSet reported that 86% of S&P 500 companies beat EPS estimates, against a five-year average of 78%, and blended earnings growth of 52.0%.
Read the composition of that number before drawing conclusions from it. Investment gains at Alphabet, US$98 billion, and Amazon, US$53.4 billion, accounted for around two-thirds of the index’s dollar-level earnings increase. At the 31 July cut, excluding those two companies reduced the aggregate earnings surprise from 31.4% to 9.2%. The headline growth rate is not operating growth.
Capital expenditure tells a cleaner story. Alphabet, Microsoft, Meta and Amazon have guided to roughly US$725 billion of combined capital expenditure in 2026, against US$410 billion in 2025, a 77% increase directed largely at data centres and AI infrastructure.
Market Breadth Has Widened
The narrow-market description that applied through 2024 and 2025 no longer fits. In the first half of 2026, 46.3% of S&P 500 constituents outperformed the index, against 27.7% in 2024 and 30.5% in 2025. The Magnificent 7 subtracted roughly two percentage points from the index return over that period while the other 493 constituents contributed 10.2 points. The equal-weighted S&P 500 returned 12.1% against 10.2% for the capitalisation-weighted index. Microsoft alone fell 22.5%, costing the index 1.4 points.
Concentration by weight remains at historic highs. The Magnificent 7 represented 33.4% of the index at 30 June 2026 and peaked near 35% in early June, a record, easing to around 32% by mid-August. The long-run average weight of the seven largest constituents since 1957 is roughly 17%. Weight and return contribution have moved in opposite directions during 2026, with rotation into healthcare and financials since early June.
The Dividend Position
The S&P/ASX 200 yielded roughly 3.4% at 31 July 2026 against roughly 1.05% for the S&P 500, before franking. Australian companies distribute a higher proportion of earnings as dividends than their US counterparts, and a larger share of the ASX’s long-run total return has come from reinvested dividends rather than price growth.
Franking credits attach to fully franked Australian dividends and add to the after-tax return for Australian investors. The US market has no equivalent.
Currency
The Australian dollar traded at US$0.7170 on 1 September 2026, against a September 2025 monthly average of US$0.6593, an appreciation of roughly 8.8% over twelve months. That move is why the S&P 500’s 22.3% US dollar return converted to 9.2% in Australian dollars.
Currency works both ways. A weakening Australian dollar amplifies returns from US positions on conversion; a strengthening one reduces them. The AUD typically falls during global risk-off periods, which gives unhedged US exposure a buffer in equity market drawdowns.
Could the Tide Be Turning for Australian Shares?
Several arguments point to the gap narrowing. None of them is a forecast.
Mean Reversion
After a long stretch of underperformance, the case for reversion rests on the historical pattern of leadership rotating between markets. Global capital rotating away from expensive technology names towards cyclical and value sectors would favour a financials- and resources-heavy index.
Commodity Demand
Constrained supply after years of underinvestment, electrification infrastructure, and rising defence spending all point towards higher demand for metals, where Australia is a major producer. AI capital expenditure runs the same way: data centres consume energy, land and physical inputs.
Australian Corporate Profits
The August 2026 ASX reporting season produced 67% of results ahead of expectations against 13% below, with 59% of companies raising dividends and 67% reporting higher profits than a year earlier. Consensus FY26 earnings growth sits at 11.6%.
The composition qualifies that figure. Excluding mining and energy, underlying earnings growth was approximately 5.3%. The headline number rests on the resources sector.
Structural Factors
Australia has a superannuation pool among the largest in the world, a position as a major producer of natural resources, and sustained migration of skilled and high-net-worth individuals.
The Case Against
Australian equity valuations are not obviously cheap by historical standards, and these cycles have run longer than investors expected before. The argument establishes that the comparison is two-sided, not that the turn has arrived.
Rivkin’s Growth Portfolios
Rivkin runs two comparable growth-focused portfolios, one for each market: the US Growth Portfolio and the ASX Growth Portfolio, both 14-stock portfolios targeting capital appreciation rather than income. [Insert current return figures. The published comparison uses data as at 31 May 2025 and requires refreshing before publication.]
These figures reflect Rivkin’s portfolio construction and stock selection rather than the underlying indices, so they are not a substitute for the ASX 200 against S&P 500 comparison above. Past performance is not a guarantee of future performance, and returns are calculated using Rivkin’s own methodology. Members should review the full monthly return history.
Australian Stock Market Vs US Stock Market: A Side-by-Side Comparison
| Feature | ASX 200 (Australia) | S&P 500 (US) |
| Dominant sectors | Financials 34.5%, materials 25.0% | Information technology 37.8%, financials 12.3% |
| Information technology weight | 2.0% | 37.8% |
| Top 10 concentration | 47.6% | 37.5% |
| Dividend yield | Approximately 3.4% | Approximately 1.05% |
| Franking credits | Yes, on eligible dividends | No equivalent |
| 1-year total return | 6.0% (to 31 July 2026) | 22.3% in USD, 9.2% in AUD (to 30 June and 31 July 2026) |
| 5-year total return | 8.0% a year | 13.4% a year in both USD and AUD |
| Market breadth | Concentrated in banks and miners | 46.3% of constituents beat the index in H1 2026 |
| Trading hours (AEST) | Local trading day | Overnight for Australian investors |
| Currency exposure for Australians | None | USD exposure unless hedged |
Rivkin publishes independent research on both markets. Read the Rivkin Report’s coverage of how to invest in US shares from Australia.
Practical Considerations
Tax Treatment
Australian residents holding US shares pay 15% US withholding tax on dividends under Article 10 of the Australia-US tax treaty, reduced from the 30% statutory rate on lodgement of a valid W-8BEN. That reduces the after-tax yield on US holdings. Capital gains on US shares held by Australian residents are taxed under Australian law, with the 50% CGT discount available on assets held for at least 12 months.
Currency Hedging
Some investors hedge USD exposure through hedged ETFs. Others hold unhedged and accept currency volatility as part of international diversification. The choice depends on your view of the AUD and your tolerance for the additional volatility. The past twelve months illustrate the size of the effect: 22.3% unhedged in USD terms became 9.2% in AUD.
Access Vehicles
Australians can access US market exposure through ASX-listed ETFs including IVV (iShares S&P 500 ETF), NDQ (Betashares Nasdaq 100 ETF) and VTS (Vanguard US Total Market Shares Index ETF), through international brokerage accounts, or through diversified managed portfolios blending Australian and global equities. Currency-hedged versions of several of these are also listed.
Frequently Asked Questions
Has the Australian stock market ever outperformed the US?
Yes, over multi-decade stretches. Leadership between the two markets has rotated over the long run, and Australia has ranked at or near the top of long-run international return studies once dividends are included. The current run of US outperformance dates from the global financial crisis.
Do I need to choose between the two markets?
No. Most constructed portfolios hold both. The ASX provides franking, dividend income and exposure to financials and resources. US exposure provides sector diversification and access to global technology, which the ASX cannot supply at a 2% index weight.
Is currency risk a problem when investing in US shares?
It is a material factor in either direction. Over the year to mid-2026, a rising Australian dollar cut the S&P 500’s return for unhedged Australian investors from 22.3% to 9.2%. In risk-off periods, the AUD typically falls, which works the other way.
Which index is more concentrated?
The ASX 200, on top-ten weight. Its top ten constituents represented 47.6% of the index at 31 July 2026 against 37.5% for the S&P 500.
Conclusion
The two markets contribute different things. The ASX supplies income, franking, and exposure to commodities and financials at a top-ten concentration higher than the S&P 500’s. The US market supplies scale, sector diversity, and technology exposure the ASX does not have, with a 2026 return profile that has broadened well beyond the largest names.
For an Australian investor, currency is the third variable, and over the past year it has been the largest one.
The Rivkin Report delivers independent research across the ASX and US markets. Contact us for details.
