You can reduce dependence on a handful of dominant AI-related companies by first checking your portfolio’s actual holdings and weights, then broadening exposure where it fits your goals. A fund can own hundreds of stocks and still be heavily influenced by its biggest positions. Diversification is a way to manage that concentration—not a forecast that those companies are about to fall.
Why a broad index can still be concentrated
Many broad U.S. stock funds track market-cap-weighted indexes: companies with larger market values receive larger portfolio weights. That means the number of holdings alone does not tell you how diversified a fund is; a few very large companies can drive a substantial share of its performance.
The 10 largest companies represented almost 40% of the S&P 500 by mid-2025, according to S&P Dow Jones Indices’ 2026 report, which said that level had not been seen since the mid-1960s. S&P DJI’s report, In the Shadows of Giants, provides the dated figure. Index and fund weights change as prices and index constituents change.
Start with a look-through portfolio check
Review investments across all of your accounts, including the underlying holdings of mutual funds, ETFs, and retirement-plan options. The same large companies may appear in several funds, so a portfolio that looks spread across multiple products may still have overlapping exposure.
Windows Errors? Fix Them Before They Spread
Repair common Windows errors and clear accumulated junk for a smoother, more stable PC - no reinstall needed.Free scan · no reinstallCrashes, No Sound, or Screen Glitches?
Random freezes, missing sound and display glitches usually trace back to one bad driver. Find and replace yours safely.Free scan · under a minute#1 Best Overall
- Largest-company weights: Identify the biggest positions and calculate their combined share of your total portfolio.
- Sector and geographic exposure: Check how much is tied to U.S. technology and other sectors, as well as how much is invested outside the United States.
- Asset mix: Compare your equity and bond exposure with your goals, time horizon, and ability to withstand losses.
- Risk, not just value: A holding’s share of portfolio risk can differ from its share of portfolio value. Risk estimates depend on assumptions and are not a guarantee of future behavior.
Use current fund holdings and statements where available; historical index weights are not a substitute for checking what you own now.
Ways to broaden exposure—and what changes
There is no single adjustment that suits every investor. Each approach shifts the portfolio’s exposures and can lag when the market’s recent leaders continue to outperform.
Add international stocks
Non-U.S. stocks can reduce reliance on U.S. mega-cap leadership and add exposure to other markets. They also introduce country, currency, and market risks, and they may perform differently from U.S. stocks. Vanguard’s May 2025 discussion includes international equities as one possible diversification component, not a universal prescription. Read Vanguard’s ETF industry trends discussion.
Consider small- and mid-cap stocks
Companies outside the largest-cap segment can broaden exposure by company size. Their performance and volatility patterns may differ from those of mega-cap stocks, and a shift toward them can underperform when the largest companies lead. Vanguard’s research discusses small- and mid-cap stocks as options to assess, rather than guaranteed diversifiers.
Recommended Free Tools
Rank #3
- 30-Pocket Portfolio Display Book: Each art binder with 30 bound clear sheet protectors, letting you show 60 pages of 9x12" letter size or smaller. Folder measures 12 7/8" (L) x 9 11/16" (W) x 11/16" (G).
- Customizable Spine Title: You can label and identify your watercolors, sketches, scrapbook, art pieces, sheet music, certificates, and other projects by customizing the reversible spine insert.
- High Transparency & Lies Flat When Open: Our presentation book with crystal clear PP sheet protectors offers complete transparency for checking through and organizing. Bound sheet protector lies flat when open, free your hands.
- Archival Quality & Heavy Duty: Made from durable and light weight polypropylene which is archival quality, acid-free, non-stick, and non-glare, and water-proof. Thickened and sturdy cover won’t easy to crack and keeps your clear sleeves from being damaged.
- Multi-Function: Not only suitable for long-term storage but also for displaying your paintings, photos, artwork, drawing, stencils. Great gift for students, teachers, office workers, secretaries, musicians, painters, etc.
Compare market-cap, equal-weight, and capped approaches
Market-cap weighting lets the largest companies take the largest shares. Equal-weight indexes assign similar weights to constituents, while capped approaches limit the weight of any single company or group. These methods can reduce the influence of the largest names, but they also change stock and sector exposures and may involve different rebalancing needs. S&P DJI discusses equal-weight and capped approaches in its U.S. equities discussion.
As an illustration—not a typical outcome or recommendation—S&P Global Market Intelligence described a constructed portfolio in which reducing its five largest positions by 25% lowered their combined weight from 27.9% to 20.9%. Its estimate that more than 8% of total portfolio risk could be reallocated applied only to that example. The exercise does not establish what an adjustment would do in your portfolio. Read the August 25, 2026 analysis.
Rank #4
Use bonds as part of an appropriate asset mix
Bonds may diversify equity risk, but whether to hold them—and how much—depends on your time horizon, goals, and capacity to bear losses. Vanguard includes bonds among possible diversification components; that is research commentary, not an allocation recommendation for every investor.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Choose an adjustment without trying to time a crash
Concentration describes how a portfolio is positioned; it does not reliably predict what the market will do next. S&P DJI’s historical discussion cautions against treating concentration as a signal that poor returns are imminent. If you change your portfolio, make the decision because its current exposures do not fit your plan—not because a decline is certain.
What’s actually slowing this PC down?
Pick the symptom - the matching free tool is one click away.
Best Value
- 40-Pocket Large Capacity Portfolio Book: Each art binder with 40 bound (non-refillable) top-loading clear sheet protectors, letting you show 80 pages of 9x12" letter size or smaller. Folder measures 12 7/8" (L) x 9 11/16" (W) x 11/16" (G).
- Tailor-Made Spine Title: You can label and identify your watercolors, sketches, scrapbook, art pieces, sheet music, certificates, and other projects by customizing the reversible spine insert.
- High Transparency & Lies Flat When Open: Our presentation book with crystal clear PP sheet protectors offers complete transparency for checking through and organizing. Bound sheet protector lies flat when open, free your hands.
- Archival Quality & Heavy Duty: Made from durable and light weight polypropylene which is archival quality, acid-free, non-stick, and non-glare, and water-proof. Thickened and sturdy cover won’t easy to crack and keeps your clear sleeves from being damaged.
- Multi-Function: Not only suitable for long-term storage but also for displaying your paintings, photos, artwork, drawing, stencils. Great gift for students, teachers, office workers, secretaries, musicians, painters, etc.
Before making a change, compare the proposed holdings with what you already own and consider:
- Costs and turnover: Check fund expenses and how frequently the strategy trades.
- Taxes and account rules: Selling in a taxable account can have tax consequences; available options and restrictions vary by account.
- Rebalancing: Equal-weight and capped strategies may require different rebalancing than market-cap-weighted funds. Decide how you will keep the portfolio aligned with your intended mix.
- Risk tolerance and time horizon: A broader set of holdings can still lose value, and different segments may have extended periods of weaker performance.
Vanguard states plainly that “Diversification does not ensure a profit or protect against a loss.” It can reduce dependence on a narrow set of holdings, but it cannot remove investment risk.
Quick Recap
Product prices and availability are accurate as of the date/time indicated and are subject to change. Any price and availability information displayed on Amazon at the time of purchase will apply.
