Index-fund concentration: seven stocks, a third of an S&P 500 tracker
A broad fund's label says 500 companies. Open the holdings and seven names carry a third of it.
A broad index fund is sold as the safe, diversified core of a portfolio. The label says 500 companies, or 1,500, or the whole developed world. Open the holdings and the top of the list tells a narrower story: a handful of names carries most of the fund.
We ran the look-through on the funds most people actually hold. Here is what the holdings show.
Take VOO, Vanguard's S&P 500 ETF. Its last filed holdings (SEC Form N-PORT, period ending 2026-03-31) list 519 positions. The top 10 are 36.4% of the fund. The seven megacaps people call the Magnificent Seven (Nvidia, Apple, Microsoft, Alphabet, Amazon, Meta, Tesla) are 32.2% of it. Nvidia alone is 7.6%.
That is one company at 7.6% and seven companies at nearly a third, inside a product whose entire pitch is breadth. The other 512 holdings split the remaining two-thirds.
A cleaner way to read it: the inverse Herfindahl index, the "effective number of stocks," asks how many equally weighted holdings would give the same concentration. For VOO it is about 51. A fund of 519 names carries the concentration of roughly 51 equal positions.
This is not a Vanguard quirk; it is cap-weighting. State Street's S&P 500 fund, SPY (holdings dated 2026-06-12), is 37.4% top-10 and 32.7% in the same seven names. Any fund that weights by market value gives the largest companies the largest slice, and the largest companies have rarely been this large. Apollo's chief economist Torsten Slok wrote in March 2026 that the 10 biggest companies are "almost 40% of the index." The Shiller CAPE valuation ratio sat at 41.92 on 16 June 2026, within reach of its December 1999 record of 44.19.
The instinct, on seeing this, is to reach for something broader. The broader funds hold the same seven names, just diluted.
Only at true global breadth does the load ease. Vanguard's Total World fund, VT (10,039 stocks, dated 2026-01-31), runs a 21.3% top-10 and 18.6% in the seven names, with an effective count near 151. More breadth dilutes the megacaps, but none of these funds escapes them.
The pattern is not limited to the famous tickers. Across the equity ETFs we hold full holdings for, 974 put more than 20% of their money into those seven stocks, and 152 put more than 40%.
Narrow it to funds whose names suggest breadth. Of 946 equity funds in our data with names containing words like "world," "global," "total," "broad" or "core," 132 hold more than 25% in the seven megacaps. iShares Global 100 (IOO) is 45.2%. iShares Russell 1000 Growth (IWF) is 51.2%. The word on the label and the weight in the file point in opposite directions.
Sector-themed funds go further by design. The Invesco QQQ Trust (Nasdaq-100, 102 holdings, dated 2026-03-31) is 46.9% top-10, 40.5% in the seven names, and 51% information technology. That is a concentrated bet, fairly sold as one. The harder cases are the funds that look diversified and are not.
Read it from the stock's side and the reach is wider still. Nvidia appears in 1,489 of the equity funds we cover, at a median weight of 5.6% and as high as 28% in some. Apple is in 1,276 funds, up to 20.3%. A retail portfolio built from three or four "different" funds usually holds these names several times over, a problem covered in the overlap post.
Two things, mostly. Cap-weighting hands more of every new dollar to whatever is already biggest, and for three years the biggest companies have outrun everything else. From the start of 2023 through end-2025 the cap-weighted S&P 500 returned 86% against 43% for its equal-weight version, the widest three-year gap since 1971 (Motley Fool, January 2026). Concentration is the mechanical result of that run, not a forecast about what comes next.
You do not need a view on whether the AI trade unwinds to want to know your exposure to it. Three numbers tell you most of it:
Paste your funds into ETF Trace to see these computed across your whole portfolio, with the holdings date and source filing on every fund.
About the data: figures for individual funds come from each fund's most recent holdings on file, dated above; US funds from SEC Form N-PORT, European UCITS funds from the issuer's published holdings. Cross-fund counts (such as "974 funds above 20%") cover the equity ETFs ETF Trace holds full holdings for, are computed from each fund's own constituent weights, and are not weighted by fund assets, so they describe the funds, not the dollars invested in them. External figures are linked to their sources.