US stock market concentration cracked a more than 90-year record late last year, according to data from the Morningstar-owned indexer, Center for Research in Security Prices (CRSP).
Citing the CRSP numbers, a Morningstar article the February noted that the top 10 companies “reached 37.7% of the US stock market value on Oct. 31, 2025, surpassing the previous month-end peak of May 31, 1932, when the top 10 stocks collectively represented 37.3% of market value”.
Although the top 10 weight in US equity markets has since dropped to about 36 per cent (and probably lower still after the sell-off last Friday), the technology-heavy concentration levels remain well above historical norms.
But if the US is the gravitational centre of the stock skew, the distortion stretches well beyond the core into broader global indices and even as far as emerging markets.
Glen Finegan, Skerryvore Asset Management lead portfolio manager, said the MSCI Emerging Markets (MSCI EM) Index has become “incredibly concentrated” around the technology theme, now bursting with artificial intelligence (AI) optimism.
MSCI figures show the top 10 companies account for about 39 per cent of the index with Taiwan Semiconductor (TSMC) accounting for almost 14.5 per cent of the total.
“There’s some good quality technology companies that are an important part of the [tech and AI] supply chain – in the chip sector, for example, there is robust demand,” Finegan said. “We own some of them but their valuations are becoming much less attractive.”
The Edinburgh-headquartered Skerryvore has sold into the tech strength, diversifying into quality companies in the retail, food/drink, financial and healthcare sectors, he said, that offer long-term growth prospects at discount prices.
As part of the rotation away from expensive tech stocks, the manager has also returned to the Chinese market, finding value among manufacturers of goods such as whiteware, medical devices and electronic relays.
“There are already global number one manufacturers in their sectors – or becoming number one,” Finegan said.
As per the Skerryvore March quarter report, the fund holds 55 stocks domiciled in 20 countries, covering eight sectors and 25 industries from South African banks to Vietnamese food retailers to Coca-Cola bottling plants everywhere.
Finegan said the firm has a “watchlist” of about 350 companies across the EM universe that first pass its governance test while also featuring profitability, strong balance sheets and a sustainable business franchise.
With the AI-tech narrative still driving returns, however, the Skerryvore emerging markets Australian unit trust lagged the index by more than 21 per cent over the 12 months to the end of March this year, returning -3.8 per cent (after fees and expenses) versus the benchmark 17.9 per cent: since inception in December 2020 the fund delivered annualised net performance of 5.3 per cent compared to the index 6.5 per cent.
But Finegan, who started as an emerging markets portfolio manager in 2001 with the-then First State Stewart, said eventually the AI capex wave “will subside” in a risk for EM companies surfing the tech exuberance.
Established in 2019, Skerryvore is part of the Australian Bennelong fund distribution business. In 2024 the manager acquired the Bennelong UK operation, known as BennBridge.
About 45 per cent of the US$1.4 billion of assets under management is sourced from Australasian investors with NZ clients including the almost $1 billion Tauranga-based charitable fund, TECT.