We have all noticed that the S&P 500 has become unusually concentrated. What is less obvious is how today compares to earlier eras, simply because the data are harder to find.
Bloomberg published a helpful chart over the weekend using the UBS Global Investment Returns 2025 Yearbook (Dimson, Marsh, and Staunton of London Business School), extending back to 1900.
Because the series is incomplete before 1925, I anchored the analysis in 1926, where we also have a clean return history. As an aside, it still amazes me that what we used to think of as “the Ibbotson data” now gives us essentially a full century of returns.
The chart below shows concentration over time using two metrics: the weight of the largest single stock and the combined weight of the ten largest stocks.
Looking at the long-term data, I would argue there are four distinct phases of U.S. equity market concentration, most clearly observed through the weight of the top ten holdings.
From 1926 to 1966, market concentration was relatively high and remarkably stable, averaging around 30 percent.
Over the next two decades, concentration declined steadily, bottoming out around 1986.
From roughly 1986 through the mid-2010s, concentration again remained stable, this time at a much lower level—approximately 15.5 percent.
Finally, over the past decade, concentration has increased sharply and now sits in approximately the 99th percentile of historical experience.
With this framework in hand, I looked for any obvious relationship between market concentration and subsequent returns. In short, I did not find a particularly strong one.
I began by separating returns into periods of above-average and below-average concentration. More concentrated markets were modestly more volatile than less concentrated ones, which is intuitive, but the differences were not especially large.
Average returns were marginally higher during concentrated periods than during unconcentrated periods. The effect was small, but it was directionally positive.
Finally, I tested simple timing strategies. A strategy that moved to cash during concentrated periods and equities during unconcentrated periods dramatically underperformed a simple buy-and-hold approach. Reversing the strategy—owning equities during concentrated periods and cash otherwise—performed slightly worse still, and also lagged buy-and-hold by a wide margin.
It is natural to be concerned about today’s level of market concentration. After examining the historical data, however, I am not inclined to worry too much about it as a standalone risk factor.
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On another note, Acropolis Insights will now arrive in your inbox on the first Monday of each month. After 12.5 years and 1,341 Insights (it was daily at first, if you are doing the math), I have decided that while I still have something to say, I would also like to reclaim my Sundays.
I genuinely enjoy writing these Insights. Moving to a monthly cadence allows me to continue doing so with more intention, while also opening the door for additional voices from Acropolis. Over time, you will hear from more members of our team—something we believe will benefit everyone. After all, diversification works with authors and writing, too.
