Separate holdings, one risk: why a varied portfolio can…

AI summary of the source article

Portfolio diversification extends beyond holding separate assets, as adding funds can inadvertently deepen exposure to shared macroeconomic or sector conditions. In the S&P 500, the top ten constituents represented 37.8% of the index, led by Nvidia, Apple, and Microsoft. Concurrently, correlations between stocks and bonds shifted from 0.66 in 2022 to 0.11 between early 2025 and mid-2026. Furthermore, retail traders generated approximately 90% of turnover in leveraged funds, which amplify single-company risk rather than spreading it. As a result, brokers such as FXTM need to provide educational content clarifying costs, leverage, and how specific instruments impact overall portfolio risk.

Why it matters

Brokers face increasing pressure to educate retail traders about how concentrated index weightings and leveraged instruments alter actual portfolio risk exposure.

Key facts

• The S&P 500's ten largest constituents, led by Nvidia, Apple, and Microsoft, accounted for 37.8% of the index.
• Morningstar measured stock and bond index correlations falling from 0.66 in 2022 to 0.11 from early 2025 through mid-2026.
• Active retail traders accounted for approximately 90% of leveraged-fund turnover in an April–July 2025 analysis.