If you’ve been paying attention to financial media lately, you’ll have seen increasingly anxious commentary about market concentration. The warning is familiar: the top 10 companies now make up a larger portion of global equity indices than ever before. Most of them are technology and AI-driven businesses, and the implication is clear—if these giants stumble, your portfolio will too.
It’s a concern worth acknowledging. But before reacting, it’s important to understand what’s really going on beneath the surface.
First, these are not “10 companies” in the way we traditionally think about them. They are vast ecosystems made up of multiple businesses, many of which could easily stand on their own as large, publicly listed companies.
Take Apple as an example. Its AirPods business alone is estimated to generate around $20 billion a year in revenue—larger than Spotify, Nintendo, eBay, or Airbnb. The same could be said for Apple’s Mac, iPad, and Wearables divisions. If Apple were broken into its component parts, the index would instantly look far more diversified, without you owning anything different.
This pattern repeats across the so-called top 10. YouTube, tucked inside Alphabet, generates over $50 billion in annual revenue. Amazon’s cloud business, AWS, now exceeds $100 billion. Microsoft houses Azure, Office, LinkedIn, and Xbox—each a major enterprise in its own right. What looks like concentration is, in part, a quirk of corporate structure.
It’s also worth remembering that market concentration is not new. There has always been a dominant group driving returns. In the 1980s it was oil and industrial companies. In the late 1990s it was telecoms and dot-coms. The names change, but leadership concentration is a constant feature of markets.
What is different today is the quality of earnings. These companies are not priced on hope alone. They generate substantial profits from products and services used by billions of people daily. That doesn’t make them invincible, but it does make today’s concentration very different from past excesses.
Importantly, the index is not static. If these companies disappoint, their weight will naturally shrink. Index investing is self-correcting by design—it quietly reduces exposure to what’s fading and increases exposure to what’s rising, without requiring predictions or heroic decisions.
The practical question is this: even if concentration leads to lower returns ahead, what’s the alternative? Guessing future winners? Moving to cash? Each carries its own risks and relies on forecasts we know are unreliable.
For long-term investors, today’s concentration is unlikely to be the deciding factor. Broad diversification across thousands of companies remains the most sensible strategy—even when a handful currently dominate the headlines.
And as always, if you’d like to talk through what this means for your own situation, we’re here.
Dirk Groeneveld, Certified Financial Planner
t. 083 261 9287
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