The sector table is the real holdings statement#
Nobody reads it. Everybody should, because it’s the only page that tells you what your money is actually exposed to.
Here’s Vanguard’s VFV, an S&P 500 tracker, broken out by sector:
| Sector | Weight |
|---|---|
| Information Technology | 30.4% |
| Financials | 14.4% |
| Healthcare | 10.8% |
| Consumer Discretionary | 10.4% |
| Communication Services | 9.3% |
| Industrials | 8.6% |
| Consumer Staples | 6.2% |
| Energy | 3.2% |
| Utilities | 2.6% |
| Real Estate | 2.2% |
| Materials | 2.0% |
That table was 30.4% technology at one snapshot and 34.8% by September of the same year. Market-wide the trend has kept going: Information Technology reached roughly 38% of the S&P 500 by mid-2026.
Sector weights are not a fixed feature of the fund. They’re an output of what the market currently values, and they drift without anyone consulting you.
The holdings list says it twice#
Same message from the other direction. VFV’s top five holdings as of April 2025: Apple 6.8%, Microsoft 6.2%, Nvidia 5.6%, Amazon 3.7%, Alphabet 3.6%. The top 10 came to 35.6% of the entire fund.
Nvidia alone had grown from 5.6% to 8.0% by September. One company, moving 2.4 percentage points of your total portfolio, in six months, with no action from you.
Market-wide, the top 10 stocks now account for roughly 37–40% of the S&P 500. You own 505 companies. Two of every five dollars sit in ten of them.
This isn’t a reason to avoid it#
I want to be precise, because “the index is concentrated” gets used as an argument for expensive alternatives, and that’s not where this goes.
Market-cap weighting concentrating in winners isn’t a bug. It’s the mechanism. The index holds more of what the market values most, which is why it captures the winners automatically and why it has beaten most active managers for decades. The concentration is the strategy working.
The problem is what people build on top of it.
If your portfolio is an S&P 500 fund plus a Nasdaq-100 fund plus a tech sector fund plus a few individual names you like, you have not diversified across four holdings. You’ve bought the same exposure four times with four expense ratios. The S&P 500 tracker was already a third technology before you started stacking.
Adding a fund that’s 100% tech to a fund that’s 38% tech doesn’t balance anything. Count exposures, not tickers.
The rest of the fact sheet, briefly#
The sector table is the headline, but three other things on the page are worth your time.
MER. VFV charges 0.09% — 90 cents per $1,000 per year, against 2%+ for many actively managed funds. A 0.41% difference between similar ETFs compounds into thousands of dollars over 30 years. It’s the only guaranteed number in the document.
The two prices. NAV is the true per-unit value, calculated after the close: total holdings divided by units outstanding. Market price is what supply and demand set during trading hours. They track closely when a fund is liquid — VFV’s market price stayed within 0.02% of NAV, and its bid-ask spread is the same 0.02%. On thinly traded niche ETFs that gap widens, and it’s a real cost paid on both entry and exit that never shows up in the expense ratio.
The worst quarter. VFV’s worst three-month return was −13.68%, turning $1,000 into $863. That’s the number that tells you whether you can hold the thing.
What to do with the concentration#
Three defensible responses, and one non-response.
Accept it deliberately. US large-cap tech has driven global returns for over a decade. Owning the index means owning that. Fine — as long as you can say the sentence out loud.
Offset it. Add genuine international exposure, or small-cap, or value. The point isn’t that these will outperform. It’s that they aren’t the same bet.
Cap it. Some investors use equal-weight versions of the index specifically to defuse top-10 concentration. Different risks, different tracking, and a higher fee — a real option with real trade-offs.
The non-response is buying more tech funds and calling it diversification because the ticker is different.
Summary — and what to do about it#
Diversification is a property of your exposures, not a count of your holdings.
- Read the sector table on every fund you own. It’s the real description of what you hold.
- Add the tech weights together across all your funds. That total is your actual position. Most people are shocked by it.
- Check the top-10 concentration too. Roughly 40% of the S&P 500 sits in ten companies right now.
- Recheck annually. Weights drift as prices move. Yours drifted while you read this.
- Don’t fix concentration by buying more of the same thing. A Nasdaq fund does not offset an S&P 500 fund.
- Keep the fee low regardless. 0.09% versus 2% is the one part of this you fully control.
The index is still the right default for most people. Just know that “broad market” describes how it’s built, not how concentrated it currently is.
Sources & further reading#
- AlphaEx Capital, S&P 500 sector breakdown 2026 — Information Technology near 38% of index weight.
- Pensions & Investments, S&P 500 index concentration — top 10 stocks approaching 40% of the index.
- RBC Wealth Management, “The Great Narrowing” — context on the rise in index concentration.
- Lord Abbett on stock market concentration — the case for and against acting on it.
