Diversified—or Just Concentrated?

Many investors assume that owning an S&P 500 index fund automatically provides broad diversification. After all, the index includes 500 of America's largest companies.

But diversification isn't simply about the number of stocks you own—it's about the risks those stocks represent.

As a handful of mega-cap companies have grown to account for an increasingly large share of the market, many index-based portfolios have become more concentrated than investors realize. Understanding where your portfolio's exposures truly lie can help ensure your investment strategy remains aligned with your long-term goals, rather than being driven by the continued success of just a few companies.

Is Your Portfolio As Diversified As You Think?

It is normal for the largest companies to represent a meaningful share of a market-cap-weighted index—but today’s concentration is unusually high.

Over the past decade, the top 10 companies’ share of the S&P 500 has nearly doubled, with their combined market value rising from approximately $3.2 trillion in 2015 to $24.4 trillion today. That leaves many investors asking an important question: Does owning the index still provide as much diversification as they think it does?

Top Ten Company Concentration in S&P 500

Source: JPMorgan Guide to the Markets – US (June 30, 2026)

Why Has Indexed Concentration Increased?

Most widely owned stock indices weigh companies by market capitalization. As a company's value rises, its index weight automatically increases. This rewards successful businesses, but it can also allow yesterday’s winners to become tomorrow’s dominant portfolio exposures.

Recent U.S. market gains have been led by a narrow group of mega-cap companies tied to technology, digital platforms, semiconductors, and artificial intelligence. Several of these firms are exceptional businesses, but their common return drivers mean they may not provide as much diversification from one another as their different company names suggest.

How Bias Can Magnify The Issue

U.S. investors often hold more domestic stocks than the global market would imply. That home bias can feel comfortable, yet it concentrates portfolios in one country, one currency, one policy regime, and a relatively narrow group of market leaders.

Top Ten Concentration Across Major Equity Markets
(% of index market value in top 10 companies)

Source: Capital Group, 2026 Midyear Outlook

The concern is not that large U.S. companies must underperform. It is that a portfolio may be making a much larger bet on them than the investor realizes.

Why Investors Should Pay Attention

A few companies can drive the whole portfolio. When the largest holdings move together, index returns can become unusually dependent on company-specific earnings, regulation, capital spending, and investor enthusiasm. A setback in one theme can affect many holdings at once.
Sector labels may understate common risks. A portfolio may appear spread across technology, communication services, and consumer discretionary, while still relying on similar forces: digital advertising, cloud computing, semiconductor demand, artificial intelligence investment, and premium growth valuations.
Strong recent performance can create hidden drift. Investors who have not rebalanced may now own a larger U.S. large-cap growth allocation than intended. Concentration can therefore increase even when no active decision was made.
Leadership changes are difficult to predict. Market leadership has rotated repeatedly across decades, regions, company sizes, and investment styles.

5 Ways To Restore Balance

Diversification reduces the need to identify the exact turning point in advance.

Look through the labels. Review the combined weight of the top ten holdings, sectors, and recurring themes across every fund and account.
Rebalance to your intended allocation. Trim exposures that have grown beyond plan rather than allowing recent winners to determine future portfolio risk.
Broaden U.S. equity exposure. Consider complementary allocations to equal-weighted, value, quality, dividend and small- or mid-cap strategies.
Diversify geographically. International developed and emerging-market equities can add different sector mixes, valuations, currencies, and economic cycles.
Use multiple return drivers. High-quality bonds, real assets, and thoughtfully selected alternatives may help reduce reliance on equity-market leadership alone. The goal is not to avoid market leaders. It is to make sure their weight is intentional – and balanced by investments that respond differently when market leadership changes.

Bringing Your Portfolio Back Into Balance

No investment strategy should rely too heavily on a handful of companies—even if they've driven recent market performance. Periodically reviewing your portfolio can help ensure your investments remain aligned with your goals, risk tolerance, and long-term financial plan.

If you're unsure whether your portfolio is as diversified as you think, we're here to help. Contact us today to schedule a conversation and learn how a thoughtful portfolio review can help keep your investment strategy on track.

Johnathon Opet, CFP® is a financial advisor located at EmVision Capital Advisors, 251 W. Garfield Rd. Suite 155 Aurora, OH 44202. He offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. He can be reached at (330) 954-3770 or at info@emvisioncapital.com.

Securities and advisory services offered through Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. Additional advisory services offered through EmVision Capital Advisors, LLC are separate and unrelated to Commonwealth. Fixed insurance products and services are separate from and not offered through Commonwealth Financial Network. Registration as an Investment Adviser does not imply any level of skill or training.

Important Information
This is for informational purposes only, is not a solicitation, and should not be considered investment, legal or tax advice. The information in this report has been drawn from sources believed to be reliable, but its accuracy is not guaranteed and is subject to change. Investors seeking more information should contact their financial advisor. Financial advisors may seek more information by contacting AssetMark at 800-664-5345.

Investing involves risk, including the possible loss of principal. Past performance does not guarantee future results. Asset allocation cannot eliminate the risk of fluctuating prices and uncertain returns. There is no guarantee that a diversified portfolio will outperform a non-diversified portfolio. No investment strategy, such as asset allocation, can guarantee a profit or protect against loss. Actual client results will vary based on investment selection, timing, market conditions, and tax situation. It is not possible to invest directly in an index. Indexes are unmanaged, do not incur management fees, costs, and expenses, and cannot be invested in directly. Index performance assumes the reinvestment of dividends.

Investments in equities, bonds, options, and other securities, whether held individually or through mutual funds and exchange-traded funds, can decline significantly in response to adverse market conditions, company-specific events, changes in exchange rates, and domestic, international, economic, and political developments.

Bloomberg® and the referenced Bloomberg Index are service marks of Bloomberg Finance L.P. and its affiliates, (collectively, “Bloomberg”) and are used under license. Bloomberg does not approve or endorse this material, nor guarantees the accuracy or completeness of any information herein. Bloomberg and AssetMark, Inc. are separate and unaffiliated companies.

9024792.1 | 07/2026 | EXP 07/31/2028