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Use these market charts to support your conversations with clients about asset-allocation opportunities.

Addressing client concentration risks in mega-cap U.S. stocks

October 31, 2025

Mega-cap stock exposure in the S&P 500® index has reached 35-year highs, underscoring the need to ensure that your clients are properly diversified.

Line chart comparing largest 3 stocks and largest 10 stocks in S&P500 1990-2025

Key takeaways:

  • The largest 10 stocks in the S&P 500 index recently accounted for approximately 40% of its market capitalization. That’s more than when the dot-com bubble burst in March 2000.1
  • Given this backdrop, are your clients properly diversified? If not, consider exploring Fundamental Index® strategies. These strategies weight firms based on measures like cash flow, dividends, and revenue.
  • By breaking the link between stock price and index weight, Fundamental Index strategies can complement traditional cap-weighted strategies and enhance portfolio diversification.
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1 Schwab Center for Financial Research, “Every Brea(d)th You Take: Market Concentration Risks,” published 09/15/25; accessed 10/06/25: https://www.schwab.com/learn/story/every-breadth-you-take-market-concentration-risks.

Sources: Schwab Center for Financial Research®; Bloomberg. Monthly data for the 35 years ended 09/30/25. Indexes are unmanaged, do not incur management fees, costs and expenses and cannot be invested in directly. For additional information, please see https://www.schwab.com/resource/index-and-investment-term-definitions.

Cash flow for a company can be measured by its statement of cash flows, which reflects a company’s financial activity over a period of time and shows where its cash comes from and how the cash is used to pay for operations and/or invested.

Past performance is no guarantee of future results, and the opinions presented cannot be viewed as an indicator of future performance. Indexes are unmanaged, do not incur management fees, costs and expenses and cannot be invested in directly.

The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.

All expressions of opinion are subject to change without notice in reaction to shifting market, economic or political conditions. Data contained herein from third party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed.

Investing involves risk, including loss of principal.

There can be no assurance that the Fundamental Index® methodologies will achieve their desired outcomes. Each investing strategy brings with it its own set of unique risks and benefits.

Diversification and asset allocation strategies do not ensure a profit and do not protect against losses in declining markets.

Bloomberg Index Services Limited. BLOOMBERG® is a trademark and service mark of Bloomberg Finance L.P. and its affiliates (collectively “Bloomberg”). Bloomberg or Bloomberg’s licensors own all proprietary rights in the Bloomberg Indices. Neither Bloomberg nor Bloomberg’s licensors approve or endorse this material, or guarantee the accuracy or completeness of any information herein, or make any warranty, express or implied, as to the results to be obtained therefrom and, to the maximum extent allowed by law, neither shall have any liability or responsibility for injury or damages arising in connection therewith.

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Investment and Insurance Products Are: Not FDIC Insured • Not Insured by Any Federal Government Agency • Not a Deposit or Other Obligation of, or Guaranteed by, the Bank or Any of Its Affiliates • Subject to Investment Risks, Including Possible Loss of Principal Amount Invested

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