Market concentration. What’s actually going on?
- Rob Bell
- Jan 30
- 3 min read
You may have seen the headlines recently.
“The top 10 stocks now dominate the market.”
“Too much exposure to tech and AI.”
“If they fall, everything falls.”
It’s a reasonable concern, and one we take seriously. But before jumping to conclusions or changes, it’s worth slowing down and looking at what’s really happening beneath the surface.
These aren’t really “10 companies”
What we call the “top 10” aren’t single, simple businesses.
They’re collections of global operations that could easily stand on their own.
Apple isn’t just one company. Its AirPods business alone is estimated to generate around $20bn a year. On its own, that would be larger than Spotify, Nintendo, eBay, or Airbnb. The same is true of Apple’s Mac, iPad, and Wearables divisions.
Look elsewhere and the picture is similar.
YouTube, inside Alphabet, generates over $50bn of revenue.
Amazon Web Services passed $100bn last year.
Microsoft contains Azure, LinkedIn, Xbox, and Office, each a major business in its own right.
So part of the “concentration” story is really about how companies are structured, not a sudden lack of economic diversity. If these firms were broken up tomorrow, the index would instantly look far more balanced, without you owning anything different.
Market leadership is always concentrated
This isn’t new.
In the past it was oil companies, banks, or industrial giants. In 2000 it was dot-com stocks. There is always a group at the top driving returns.
What’s different today is that the current leaders are highly profitable, cash-generating businesses with global customer bases. That doesn’t make them risk-free, but it does mean their size is supported by earnings, not just excitement.
That matters.
The index adjusts over time
One thing that often gets missed in these discussions is that indices are not static.
If large companies disappoint, their weight naturally falls. If new businesses grow faster, they take their place. You’re not making a permanent bet on today’s winners.
Index investing quietly does this for you, without decisions, forecasts, or reaction to headlines. It has been working this way for decades.
Where factor tilts fit in
It’s also worth noting that we don’t rely solely on simple market-cap exposure.
Our portfolios include deliberate tilts towards factors such as value, smaller companies, and profitability. These areas of the market have historically behaved differently from the largest growth stocks and have tended to do well at different points in the cycle.
The purpose isn’t to avoid today’s market leaders, or to predict when leadership will change. It’s to build resilience into portfolios by spreading exposure across a broader set of return drivers, rather than relying on any single group of companies to deliver results.
In plain terms, it means your returns are not dependent on a handful of household names continuing to dominate indefinitely.
The real question to ask
Even if concentration does lead to a bumpier ride or lower returns for a period, what’s the alternative?
Trying to guess which companies will fall.
Moving large amounts to cash.
Making big shifts based on short-term fears.
Each option carries its own risks and usually relies on predictions that no one can make reliably.
For investors with a long-term horizon, today’s concentration is unlikely to define the outcome. What matters more is staying diversified, staying invested, and avoiding decisions driven by noise rather than need.
If you’d like to talk through how this applies to your own situation, or simply want reassurance that your plan still fits, just let us know.
This article is for information only and does not constitute financial advice. The value of investments can fall as well as rise, and you may get back less than you invest. Past performance is not a reliable indicator of future results. Any charts or examples are illustrative only and may change over time.
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