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2 minutes to read by  PH&N Institutional team Dec 18, 2025
Global equity markets have experienced a remarkable increase in market concentration over the past several years. Since the end of 2019, the S&P 500 Index has more than doubled in value, and seven specific stocks – known collectively as the “Magnificent Seven”1 – have accounted for approximately half of the market’s return, with the remaining 493 stocks accounting for the rest. This concentration of returns has led the U.S. market to outperform global indices by a significant margin, and as a result, the U.S. now constitutes a substantial portion of the global equity market – as of September 30, 2025, it accounted for 72% of the MSCI World Index.2

Active global equity managers have struggled to outperform the market in this environment. Over the five-year period ending December 31, 2024, the median global equity manager underperformed its benchmark by 1.7%. The last year of this period was particularly challenging, with the median active global equity manager underperforming by a whopping 5.9%.3 However, when we divide global equity managers into three categories – fundamental, quantitative, and low volatility (a subset of the quantitative style) – we get three very different performance stories. While fundamental global equity managers underperformed meaningfully, the median quantitative equity manager achieved significantly better (though admittedly still lackluster) results. Low volatility equities, meanwhile, struggled mightily.

While there have been numerous influences at play over the past five years, the rise in market concentration has been undeniably consequential. Following a more or less steady rise from March 2019 onwards, market concentration in the S&P 500 Index is currently the most elevated it has ever been. However, it is also critical to note that concentration levels are cyclical. As shown in Figure 2, market concentration tends to be marked by peaks and valleys over the longer term. With that in mind, the purpose of this paper is to consider the influence of changing market concentration regimes on the performance of actively managed equity strategies; more specifically, quantitatively managed long-only, long-short, and low volatility portfolios.

Download the full piece here.

1 Apple, Microsoft, Alphabet, Amazon, NVIDIA, Meta, and Tesla.

2 Source: Bloomberg, as of October 30, 2025.

3 Source: eVestment, as of December 31, 2024.

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