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Bond and stock benchmarks are more concentrated than investors realize
Using SPY and AGG as proxies, the top 10 S&P 500 stocks account for about 38% of value, while U.S. Treasuries make up close to 45% of the aggregate bond benchmark.
ETF Trends says the indexes investors use to track markets have changed over the past few years, with both stock and bond benchmarks showing higher concentration and, in the case of bonds, more interest rate risk than many investors may expect.
On the equity side, the outlet points to the S&P 500 as the stock proxy most commonly packaged for investors, noting that it is not equally weighted. Using the State Street SPDR S&P 500 ETF, SPY, as a stand in, it says the top 10 stocks now make up roughly 38% of the index value, the highest level of concentration on record, a dynamic that can make diversification a headwind for relative performance versus concentrated benchmarks.
For bonds, ETF Trends says the Bloomberg U.S. Aggregate Bond Index also has become more concentrated, using the iShares US Aggregate Bond ETF, AGG, as a proxy. It reports that the benchmark now holds close to 45% of its value in U.S. Treasuries, and links the growth in that share to a larger federal deficit that has increased the amount of Treasury issuance.
The article also connects the shift to macro funding costs, stating the federal deficit reached $1.8 trillion in fiscal year 2025, more than four times a decade earlier, and that interest payments on the national debt have crossed $1 trillion a year.
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