“Magnificent Seven” concentration creeps
into global equity markets

Key takeaways:

• Investors have grown accustomed to the heavy concentration of the “Magnificent Seven” in the S&P 500® Index, but these stocks also carry significant weight in global equity indices.
• Market concentration is becoming a structural feature of global equity markets—an important factor to consider when building a diversified portfolio.

07/30/2025 – In a volatile year for equities, a handful of mega-cap technology stocks—often referred to as the “Magnificent Seven”—have provided a consistent tailwind. Since the market’s April 8 low, renewed enthusiasm about artificial intelligence and its perceived winners has fueled the rally. While momentum has favored some (but not all) of the Mag-7, their outsized influence continues to shape overall market returns.

While market concentration is often seen as a defining feature of the S&P 500^® Index, the strong relative performance of international equities in 2025 raises a timely question: Is extreme concentration still a uniquely U.S. phenomenon—or is it becoming a broader characteristic of global equity markets?

While the benefits of global diversification remain essential, so does understanding concentration risk. In the U.S.-centric S&P 500^®, for example, a small group of companies accounted for 56% of total return in 2022, 63% in 2023, and 55% in 2024. Their outsized influence underscores how increasingly dependent the broader Index has become on a handful of dominant firms to drive performance. 

Consider the MSCI World® Index—a benchmark designed to reflect global developed markets, including the U.S. As of June 2025, the Magnificent Seven collectively made up 22% of the Index’s total market capitalization, up from 18% in late 2023. This striking level of concentration within a supposedly diversified global benchmark highlights the growing dominance of U.S. mega-cap tech firms. More importantly, it serves as a timely reminder: geographic diversification doesn’t always translate to true portfolio diversification.

Importantly, heightened concentration isn’t limited to U.S. indices. International benchmarks are showing similar trends. In Germany’s DAX Index, for instance, the top ten constituents now represent over 60% of the Index’s total weight—a level of concentration that warrants close attention from investors.

Concentration risk isn’t just a U.S. story—it’s becoming a structural feature of global equity markets. That’s an important consideration for investors aiming to build truly diversified portfolios.