Investment Insights: Observations on Index Concentration

U.S. stock market performance, as measured by the S&P 500, has been driven by a small number of stocks over the past few years. The top five holdings now represent 21.9% of the S&P 500 as of December 31, 2020. It is also striking that each of the top five holdings share a common theme: technology and e-commerce. While investors shouldn’t give up on the S&P 500, there are possible alternatives that investors might want to consider.