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Comparing Concentration Risk Around the Globe

May 13, 2025

Time to Read: 3 minutes

The top ten companies in the S&P 500 – largely technology names – comprise a third of the index’s market capitalization and are near the highest level in history. While these stocks have driven a period of strong outperformance relative to other regional equity indices, some investors worry that this concentration can lead to lower returns if these stocks’ profitability were to slow.

However, when comparing the weight of the top 10 U.S. stocks to equity concentrations abroad, concentration becomes less worrisome. The top 10 stocks of Germany, Brazil, France, South Korea and China, respectively, constitute 50% or more of each country’s equity index. The 34.4% concentration of the top 10 stocks in the S&P 500 appears less of a concern in comparison. In addition, the concentration in other regions like Japan and Emerging Markets is only marginally lower at 27-28%.

Like most metrics used to assess the qualities and appeal of an individual stock, index metrics such as concentration are most meaningful when considered relative to their peers. In our view, the lower concentration of S&P 500 stocks makes U.S. equities attractive relative to their foreign counterparts, supporting our preference for U.S. large cap stocks.

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The Global Economy Is Holding Up

This past year was rife with risks to the global economy: policy changes, tariff uncertainty and more. Yet, the global economy held up as manufacturing and services activity strengthened across the world.

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