Open a ‘global tracker’ or S&P 500 fund inside an AJ Bell, Hargreaves Lansdown or Vanguard Investor ISA this July, and the factsheet will tell you it holds somewhere between 500 and 1,500 companies. What it won’t tell you upfront is that roughly 34p of every pound now rides on just seven of them — Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta and Tesla. That’s not a rounding error or a temporary blip. It’s the highest concentration the S&P 500 has carried in its modern history, and it applies just as directly to a UK investor holding a Vanguard FTSE All-World fund as it does to someone in New York buying the S&P 500 outright, because both trackers weight by market capitalisation and both are stuffed with the same seven names near the top. Most investors don’t realise quite how concentrated a ‘global’ fund can get until a downturn makes it obvious.
Seven Names, One-Third of the Index
The scale of this shift is worth sitting with for a second. Back in 2015, what would later be nicknamed the Magnificent Seven made up around 12.4% of the S&P 500. By 2022 that figure had grown to 21.6%. It crossed 30% for the first time in 2023, and as of June 2026 it sits at roughly 34%, according to index composition data widely cited by fund analysts covering the S&P 500. Nvidia alone now accounts for about 7.7% of the entire index, the largest single-company weighting the index has carried, ahead of both Apple and Microsoft. Put that in everyday terms and it’s stark: a UK investor who believes they’ve spread £10,000 across the US stock market has, in practice, put roughly £770 of it into one chipmaker whose earnings depend heavily on a handful of cloud-computing customers buying its processors. None of this happened by accident, and it isn’t the result of some fund manager quietly overweighting a favourite stock.
Market-cap-weighted index funds are built to do exactly this — buy more of whatever is already biggest, automatically, every single time you top up an ISA or a SIPP. The mechanism is entirely mechanical, not a judgement call by anyone running the fund.
The Illusion of Diversification
A market-cap-weighted index fund doesn’t diversify away from your winners — it deliberately buys more of them.
That’s the part most people misunderstand when they choose a ‘global’ fund specifically for its diversification. Every time Nvidia’s share price rises relative to the rest of the index, the fund doesn’t trim the position to keep things balanced — it lets the winner’s weighting grow, because the entire point of cap-weighting is to mirror the market as it actually is, not as an equally-spread portfolio would look. Buy a Vanguard FTSE All-World UCITS ETF, an iShares Core S&P 500 fund, or almost any ‘passive global’ option sold on Interactive Investor, Freetrade or Trading 212, and you are, structurally, making the same bet as everyone else who bought that fund: that seven US technology and platform companies will keep growing faster than the other 493-odd names in the S&P 500, or the several thousand names in a broader world index. Fund providers rarely frame it this way in their marketing, because ‘buy the market’ sounds safer than ‘buy seven correlated mega-caps and some ballast’, even though the second description is closer to the truth for anyone holding a large slice of US equities through a standard tracker. You’ll find the same pattern inside a FTSE All-World fund’s own top-ten list, where the same seven US names typically occupy six or seven of the ten slots regardless of which UK platform happens to be packaging the fund that week. That overlap is precisely why holding three or four differently-branded ‘global’ or ‘US’ funds inside one ISA rarely buys the diversification investors assume it does — different tickers, same seven companies driving most of the movement underneath.
What Happens When the Trade Turns
The bull case for accepting this concentration is straightforward enough — these seven companies have generated the profit growth that carried global indices for the best part of three years, and betting against them has been a losing trade since well before the ‘Magnificent Seven’ label even existed. But the evidence from this year alone complicates that story more than the maximalist version usually admits. In the first half of 2026, the Magnificent Seven actually underperformed the broader S&P 500, rising around 5.4% against the index’s roughly 7.9%, as money rotated into small-caps and sectors that had been neglected for years. That underperformance caught out plenty of investors who had spent 2023 to 2025 treating the group as a one-way trade, and it’s a reminder that a multi-year winning streak doesn’t simply keep extending itself because the previous years did. Then, in early June, the group shed close to $2 trillion in combined market value over the space of a few weeks — a swing large enough that a single disappointing earnings update from one member has, on more than one occasion this year, dragged the entire S&P 500 down by more than 2% in a single session, even while most of the other 493 stocks in the index were trading higher. Most of that $2 trillion came back within weeks, which is exactly the kind of round-trip that looks tidy in hindsight and considerably less tidy while you’re living through it, particularly for anyone checking a SIPP balance more than once a month.
That’s the practical risk hiding behind the ‘diversified’ label. A portfolio that looks spread across 500 or 1,500 companies on paper can still move in lockstep, because several of its biggest holdings are more correlated with each other than their separate sector labels suggest — Nvidia sells the chips, and Microsoft, Amazon, Alphabet and Meta are among the biggest buyers of them, so a wobble in AI-related capital spending rarely stays contained to just one stock.
The FTSE’s Quiet Comeback
Compare that to what the FTSE 100 has been doing while the Magnificent Seven story dominated the headlines. London’s benchmark index closed at 10,736.23 on 24 July 2026, up almost 18% over the past year and within striking distance of its 52-week high of 10,934.94, having spent much of the year grinding steadily upward on mining, defence and financial stocks rather than a handful of technology names. The domestic backdrop helped the mood further: headline UK inflation slowed from 2.8% to 2.6% in June, and the Bank of England has held its base rate at 3.75% since a 7-2 vote at its 18 June meeting, with most economists expecting another hold when the Monetary Policy Committee next reports on 30 July. None of that guarantees the rally continues — oil-price spikes linked to Middle East tensions have already nudged some traders towards pricing in rate rises rather than cuts by early 2027, and the FTSE remains below its own 52-week high. But it does mean the index has offered UK investors something the Magnificent Seven-heavy US benchmarks structurally cannot: returns built on a genuinely different set of companies, at valuations strategists have repeatedly flagged as cheap relative to Wall Street, paying dividend yields that a growth-heavy US tracker simply doesn’t offer.
What You Can Actually Do About It
None of this means abandoning global equities or panic-selling a fund that’s done exactly what it was designed to do. Check your platform’s factsheet for the top-ten holdings weighting before assuming a fund labelled ‘global’ or ‘world’ is automatically diversified — most large-cap trackers show that figure within thirty seconds of opening the document, and if it’s north of 25%, you’re effectively holding a concentrated US technology position with a diversified-sounding name attached. If that number bothers you, there are a few real options, not just moving everything into cash:
- Equal-weight funds, such as the Xtrackers S&P 500 Equal Weight UCITS ETF, which give Nvidia and Apple the same slice of the fund as its smallest constituent instead of letting winners keep compounding their own weighting
- Value-tilted or dividend-focused funds that structurally underweight the most expensive growth names
- Topping up UK or European equity exposure directly, since a FTSE 100 tracker or a UK equity income fund simply isn’t exposed to the same seven US names in the first place
- Switching on your platform’s automatic rebalancing tool, if it has one, so winners get trimmed back towards target weightings on a schedule rather than silently taking over the portfolio — a setting most investors leave off, and then wonder years later why one sector dominates everything, among other quieter fixes worth a factsheet check
Adding a UK equity income fund or a FTSE 100 tracker alongside an existing global fund is the simplest fix for most ISA holders — it costs one extra regular contribution a month, not a portfolio overhaul, and it directly addresses the concentration problem without requiring anyone to guess when the Magnificent Seven trade finally turns. Don’t switch out of global equities altogether to solve this, though: those same seven companies still generate a genuinely outsized share of global corporate profit growth, and abandoning US exposure entirely just swaps one concentrated risk for another, arguably worse one.
Check the factsheet before your next contribution goes in. Thirty seconds now beats discovering the number the hard way during the next $2 trillion air pocket.