Highlights
- The 10 largest companies in the S&P 500® represented almost 40% of the index by mid-2025, a level of concentration not seen since the mid-1960s.
- While the past does not guarantee the future, we can gain useful perspective by examining what happened last time 10 companies held a similar index weight.
- History shows a nuanced relationship between concentration and market performance and illustrates how changes in leadership can impact markets and their benchmarks.
The concentration of U.S. equity market capitalization in a select few mega-cap companies has reached levels not seen for more than half a century due to unprecedented investment in rapidly advancing and highly disruptive technologies. The potential risks and opportunities resulting from this market concentration may find parallels in historical trends, the examination of which offers insight into the continued relevance of broad, capitalization-weighted benchmarks such as the S&P 500.
FANGs and the Evolving Monikers of the Past Few Decades
More than 12 years ago, CNBC’s “Mad Money” host Jim Cramer helped popularize the acronym “FANGs” for a select group of high-growth, technology-driven stocks that dominated their market segment. Other market participants and commentators subsequently observed and grew concerned about the narrow leadership within U.S. equity markets. The monikers and composition have evolved, but the overall outperformance by the largest U.S. companies was almost unchallenged throughout, and the distribution of market capitalization in the U.S. equity market became increasingly concentrated as a result. By mid-2025, the largest 10 companies in the S&P 500 represented almost 40% of the index, a level of concentration not seen since the mid-1960s.
