Why hold a dedicated US fund?
The United States makes up roughly 60% of global stock markets and is home to the world's dominant technology and consumer companies. Some pension investors add a dedicated US fund to tilt toward this growth engine, on top of the US exposure they already get from a global tracker. It is a way to overweight the world's largest and most innovative market.
| US fund | Type | Ongoing charge | Best for |
|---|---|---|---|
| L&G US Index | Index (broad US) | 0.10% | Cheapest broad US tracker |
| Vanguard US Equity Index | Index (broad US) | 0.10% | Wide US market coverage |
| iShares US Equity Index | Index | 0.05%–0.10% | Ultra-low cost |
| Vanguard S&P 500 (ETF/fund) | Index (S&P 500) | ~0.07%–0.10% | Pure large-cap US |
| Baillie Gifford American | Active growth | ~0.51% | High-growth US active |
S&P 500 vs total US market
The S&P 500 tracks the 500 largest US companies, while broad US funds like the L&G US Index or Vanguard US Equity Index also include mid and small caps. The difference in returns is usually modest, as large caps dominate either way. For pure, ultra-cheap US large-cap exposure, an S&P 500 tracker at around 0.07% is hard to beat.
The case for caution
A dedicated US fund concentrates your pension in one country and currency. Because you already get heavy US weighting from any global tracker, adding more increases concentration risk if US markets underperform. Active picks like Baillie Gifford American can soar in growth markets but fall hard in downturns, so size any US tilt deliberately.
Verdict
For low-cost US exposure, the L&G US Index and Vanguard US Equity Index (both 0.10%) and ultra-cheap S&P 500 trackers lead; Baillie Gifford American is the pick for active growth. Remember a global fund already holds plenty of US. Hold these in a SIPP — see our best SIPP providers guide, explore broader options in our best pension UK guide, and model growth with our pension calculator.