You Think You Own 500 Companies. You Mostly Own 10.

"S&P 500 and chill" is probably the most popular investment strategy in the world. It's also quietly becoming one of the most concentrated.

In 1990, the top 10 S&P 500 companies made up 19% of the index. Today they make up more than 40%.

According to Apollo's Chief Economist, those same 10 companies now capture 34% of all S&P 500 profits, double what they did in 1996.

Apple, Microsoft, Nvidia, Amazon, Alphabet, Meta. Different tickers with similar drivers: AI infrastructure, cloud, digital advertising, platform-scale technology.

That's not necessarily a flaw in the index. It's just not diversification.

How We Got Here

Market-cap weighting means the index automatically allocates more to the largest companies. As those companies grow, their share of the index grows with them. The S&P 500 has always had concentration at the top but the degree of concentration today is historically unusual.

In 2000, at the peak of the dot-com bubble, the top 10 made up about 27% of the index. After the crash, concentration fell. The index rebalanced. Investors felt safer.

Then it happened again faster. The difference this time is that the companies driving the concentration are genuinely profitable with strong competitive advantages. That makes the concentration feel more justified. It also makes it easier to miss.

What This Means for Your Portfolio

Most investors who own SPY or VOO believe they are broadly diversified. In terms of number of holdings, they are. In terms of economic exposure, they are significantly concentrated in one sector, one geography, and one theme.

That is not an argument against owning the index. It is an argument for understanding what you own and building around it intentionally.

The Solution Is Not to Abandon It

The solution is not to abandon the index. It's to build around it.

• Direct indexing to potentially unlock tax-loss harvesting opportunities that ETFs may not fully capture
• International exposure: developed and emerging markets with different economic drivers than US tech
• Alternatives: private equity, infrastructure, and strategies that may have lower correlation to the index
• Broader diversification across geographies, sectors, and asset classes

The S&P 500 is a strong foundation. It is not, by itself, a fully diversified portfolio.

For informational purposes only. Not investment advice. Diversification does not guarantee a profit or protect against loss. Sources: Apollo Chief Economist, RBC Wealth Management, FactSet.