Risk · Concentration · ASX
When a few giants run the whole market: concentration at the top
When you buy a broad index fund, you assume your money is neatly spread across hundreds of companies. Increasingly, that's only half true. Both here and overseas, a small number of giant companies have grown so large that they steer the whole index.
Top-heavy by design
Most index funds weight companies by size, so the biggest names get the biggest slice of your money. On the ASX, a few banks and miners dominate. Overseas, a handful of huge tech names do the same. Buy 'the market' and you're quietly making an outsized bet on a few leaders.
What it means for you
- Your 'diversified' fund may rest more on a few names than you realise.
- When those leaders stumble, the whole index can fall with them.
- Owning both an Australian and a global fund helps — but check you're not just stacking the same giants twice.
Buying the index used to mean betting on everyone. Now it can mean betting on a few.
None of this makes index funds a bad idea — they're still a sensible core for most people. It just means 'I own the index' is no longer the end of the diversification conversation. It's the beginning of it.
See it on your own portfolio
Find out which of these forces your ASX portfolio is most exposed to — in 60 seconds.
Keep reading
Why your ASX portfolio is probably more concentrated than you think
You can own a dozen Aussie shares and still be making one big bet. Here's why ASX portfolios hide concentration — and how to see it.
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Own CBA shares and have a CBA mortgage? You might be more exposed to one part of the economy than you realised. Here's the quiet overlap.
PortLens provides general information only — not personal financial advice. Examples are illustrative. Always do your own research or speak with a licensed adviser before making investment decisions.
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