The 10 largest stocks in the S&P 500 make up a remarkable 38.4% of the index.1 This concentration spills into global indices: the biggest 10 stocks in the MSCI World Index, all US-listed, account for 26.6% of the flagship global benchmark, leaving passive global equities investors heavily exposed to a handful of US tech stocks.2
But market concentration is not just a developed market story.
The MSCI Emerging Markets Index is, in some respects, even more lop-sided.3 And it shares the same strong bias towards the tech sector.
If your passive emerging markets equity fund tracks this common benchmark, you hold 12.5% of your portfolio in just one stock: Taiwan Semiconductor Manufacturing Company (TSMC).4 Meanwhile, your top 10 holdings will account for almost one-third (32.4%) of your portfolio, with five names—TSMC, Samsung Electronics, SK hynix, Hon Hai Precision Industry, and Xiaomi—all coming from the tech sector.
Market Concentration Has Also Been Climbing in EM
As of 31 January 2026.
Source: FactSet.
This concentration within the flagship EM equity index is driven by structural shifts: Taiwan’s technological dominance, led by TSMC; China’s shrinking index weight after recent relative underperformance; and the ascendancy of mega-cap quality businesses in semiconductors and internet sectors.
Attractive valuations, a positive outlook for many EM economies, and scope for further US dollar weakness suggest EM equities remain well placed after a standout 2025. For investors considering an allocation to the asset class, it is important to recognize that concentration risk is a global phenomenon—not just a developed market theme. In EM, however, active managers can be especially well-placed to turn this feature into an advantage. By looking beyond the largest benchmark constituents and drawing on bottom-up fundamental research, active approaches can tap into a broader and more diverse opportunity set, uncovering companies and countries whose fundamentals may be under-represented in the index.
Featured
Notes
1. Source: S&P Global. Data as of 30 January 2026.
2. Source: MSCI. Data as of 30 January 2026.
3. Based on free float-adjusted market capitalization index.
4. Source: MSCI. Data as of 30 January 2026.
Important Information
Published on 3 March 2026.
The performance quoted represents past performance. Past performance does not guarantee future results.
Information and opinions presented have been obtained or derived from sources believed by Lazard Asset Management LLC or its affiliates (“Lazard”) to be reliable. Lazard makes no representation as to their accuracy or completeness. All opinions expressed herein are as of the published date and are subject to change.
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Equity securities will fluctuate in price; the value of your investment will thus fluctuate, and this may result in a loss. Securities in certain non-domestic countries may be less liquid, more volatile, and less subject to governmental supervision than in one’s home market. The values of these securities may be affected by changes in currency rates, application of a country’s specific tax laws, changes in government administration, and economic and monetary policy. Emerging markets securities carry special risks, such as less developed or less efficient trading markets, a lack of company information, and differing auditing and legal standards. The securities markets of emerging markets countries can be extremely volatile; performance can also be influenced by political, social, and economic factors affecting companies in these countries.
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