Broad U.S. index funds now breach legal diversification thresholds, NYT columnist says

The U.S. stock market has become so concentrated that even broad index funds are no longer diversified, The New York Times columnist Jeff Sommer wrote on Jan. 30, 2026. Sommer said a handful of companies — including Nvidia, Microsoft, Alphabet and Apple, as well as Amazon, Broadcom, Meta and Tesla — have come to dominate returns, in part driven by investor enthusiasm for artificial intelligence.

Final data from Howard Silverblatt, senior index analyst for S&P Dow Jones Indices, showed Nvidia made up 7.8 percent of the S&P 500 on Dec. 31, 2025; Apple 6.9 percent; Microsoft 6.2 percent; and Alphabet more than 5.6 percent when both share classes are included. Those four stocks combined equaled more than 26 percent of the S&P 500, the column says.

Sommer reported that some fund families have begun notifying shareholders that broad market funds are operating as "nondiversified funds." Fidelity told shareholders that since Nov. 10 its Fidelity 500 and Fidelity Total Market funds were operating as nondiversified, and in an emailed statement said, "The benchmarks of those funds remain the same." Vanguard, State Street, BlackRock and others had made similar legal filings, and the S.E.C.

has given index funds authority to operate as nondiversified if the change is solely because the market itself has become nondiversified.

nondiversified index funds, s&p 500 concentration, nvidia 7.8 percent, apple 6.9 percent, microsoft 6.2 percent, alphabet 5.6 percent, fidelity 500 nondiversified, fidelity total market, vanguard 500 stock index fund, s.e.c. nondiversified authority, market concentration risk, artificial intelligence enthusiasm