of the S&P 500 Widely considered to be the most important stock market indicator. It tracks about 500 of the largest public U.S. companies, so its performance is often used to gauge the overall health of the U.S. stock market. Unfortunately, after three consecutive years of double-digit gains, the S&P 500 is off to a slow start in 2026, up about 0.5% year-to-date (through March 10).
There’s a lot to like about the S&P 500, but one key characteristic may be the cause of its underperformance: its focus on the tech industry. In light of this issue, is there a better alternative to index investing? Let’s take a look.
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The S&P 500 is weighted by market capitalization, so larger companies count more toward the index than smaller ones. Historically, this has generally not been an issue, but as major tech stocks have increased in value over the past few years, the index has become highly concentrated.
Nvidia, Microsoftand Appl Only makes up about 20% of the index, and the top 10 properties account for more than 38%. This is a high concentration for an index with diversification as the main selling point. The S&P 500 is still diversified, including the largest companies in all 11 major sectors, but it has arguably become more expensive (as tech stocks make up a third of the index).
Concentration in big tech stocks works in the S&P 500’s favor when the sector is booming, but it’s also a big drag when the opposite is true (as we’re witnessing right now).
If you’re interested in investing in the S&P 500 but don’t want the current concentration risk that comes with it, a good option is an equal-weight S&P 500 exchange-traded fund such as Invesco S&P 500 Equal Weight ETF (NYSEMKT: RSP ). Rather than dividing by company size, RSP allocates your investment relatively evenly across all companies in the S&P 500. The following are the top 10 holdings in the S&P 500 and their weightings are standardized relative to equal-weight indices:
|
Inc |
500 percent of the benchmark S&P |
Percentage of RSP |
|---|---|---|
|
Nvidia |
7.84% |
0.19% |
|
Appl |
6.47% |
0.18% |
|
the alphabet (Class A and C) |
5.98% |
0.18% |
|
Microsoft |
5.40% |
0.17% |
|
Amazon |
3.93% |
0.18% |
|
Broadcom |
2.64% |
0.16% |
|
Meta platforms (Class A) |
2.63% |
0.19% |
|
Tesla |
2.04% |
0.17% |
|
Berkshire Hathaway (Class B) |
1.49% |
0.20% |
Data sources: Vanguard and Invesco. Vanguard percentage as of January 31; Invesco percentage as of March 9.
