Over recent years, global equities have become highly concentrated. They are heavily weighted towards the largest stocks, especially technology mega caps.
Just 10 stocks out of 1,249 account for 27.85% of the MSCI World Index
The MSCI World Index, often used as a proxy for global equities, includes large and mid-cap stocks across 23 Developed Markets countries, and has 1,249 constituent stocks (as at 30 September 2026). Using the iShares MSCI World ETF as a public proxy for historical MSCI World holdings, the aggregated weight of the 10 largest holdings has risen from about 9% in 2014 to about 28% today 1. 2026 is not the first time that global equities have become highly concentrated.
At the peak of the Japanese asset bubble in 1989, Japan accounted for more than 40% of global equity indices (today it represents about 6% of the MSCI World). Uncontrolled money supply and lending in Japan had inflated prices in property and equities. Most of the world’s ten largest companies by market capitalisation were Japanese. The largest stocks were Industrial Bank of Japan, Sumitomo Bank, Fuji Bank and Dai-Ichi Kangyo Bank, followed by US-based multinationals Exxon Corp and General Electric. The Japanese asset bubble burst in 1990, with the Nikkei stock index plummeting.
Another example of high concentration was the dot com boom of the late 1990s, when the Information technology sector expanded (see chart below). Is it a law that over-concentration always reverts to the mean? No. But the risk is plain to see.
MSCI World sector-index capitalisation shares
The MSCI World Index is today heavily weighted to one country, the US, at 72.94% as at 30 September 2026. This has risen from 36.9% as at 31 January 1995 (see chart below, using Bloomberg data). The US accounts for about a quarter of the world’s nominal GDP, much less than its 72.94% weighting in the index.
MSCI USA Index as a proportion of MSCI World Index (by market cap)
Emerging markets: cheaper exposure to tech
Where else can investors look for equity exposure?
Emerging Markets and Asia provide a way for investors who like the AI story to invest in it at much cheaper valuations. The MSCI Emerging Markets Index has 43.78% in Information Technology, led by non-US names Taiwan Semiconductor Manufacturing Company (TSMC), Samsung Electronics and SK Hynix.
It should be noted that there is concentration risk here too: the MSCI Emerging Markets Index’s top 10 stocks comprise 39%, above the 28% of top 10 in the MSCI World. Index exposure in EM and Asia does not deliver the diversification investors may expect.
However, on a forward P/E basis, the MSCI Emerging Markets Index trades at 9.72x, much cheaper than the 17.92x of the MSCI World. This relative cheapness also shows in Price/Book Value ratios (much lower for Emerging Markets) and dividend yield (higher) as shown in the table below.
Index (30 Sep 2026) | Top 10 weight | Largest stock | Information Technology sector | Fwd P/E | Price/Book Value | Div yield |
MSCI World | 27.85% | Nvidia 5.81% | 31.78% | 17.92x | 4.10 | 1.52% |
MSCI Emerging Markets | 39.03% | TSMC 15.63% | 43.78% | 9.72x | 2.39 | 2.02% |
MSCI AC Asia ex Japan | 43.76% | TSMC 17.42% | 48.74% | 9.95x | 2.40 | 1.69% |
MSCI Europe | 21.92% | ASML 5.15% | 9.75% | 14.20x | 2.48 | 2.87% |
Source: Bloomberg, as at 30 September 2026.
Emerging markets and developing economies accounted for 45% of global GDP in 2025 up from about 25% in 2000, according to a study by the World Bank. 2 Yet Emerging Markets have a much lower proportion of the MSCI ACWI Index.
Europe: diversified from tech
For investors concerned about risks in the technology sector, European equities are a diversifier. There is less concentration than in the MSCI World, with a top ten total of 21.92% for the MSCI Europe compared to 27.85% for the MSCI World. More significantly, Europe is driven by a broader number of sectors. Information Technology is only the fourth largest sector (with 9.75%) in Europe, behind Financials (25.5%), Industrials (18.61%) and Health Care (12.72%). The top 10 of the MSCI Europe is well-spread across banks, pharma, energy, consumer staples and industrials, with only two Information Technology stocks (ASML and SAP). MSCI Europe is on 14.20x forward earnings, cheaper than the MSCI World. It has a 2.87% yield.
Europe has less exposure to technology
The MSCI World benchmark is concentrated, by sector, by country and by theme. This may be what investors want, but they should be aware of it. Concentration is not a reason to abandon US equities, but it is a reason to ensure investor returns do not depend on a single theme. Extending investment to Emerging Markets, Asia and Europe can uncover plenty of opportunities. This article has only considered indices, as proxies for these broad markets. In future articles in this series, we shall examine how active management can add value.
Emerging Markets, Asia and Europe are much cheaper than the US
Footnotes
1 Based on iShares MSCI World ETF, as at 30 May 2014 and 30 Sep 2026.
2 Balatti, Mirco; Kose, M. Ayhan; McKinnon, Kate; Palombo, Edoardo; Sugawara, Naotaka; Verduzco-Bustos, Guillermo; Vorisek, Dana. 2025. From Tailwinds to Headwinds: Emerging and Developing Economies in the Twenty-First Century. Policy Research Working Paper; 11169. © World Bank. http://hdl.handle.net/10986/43450.
3 Source: MSCI, as at 30 September 2026.
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