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Dean Cook, a multi-asset fund manager at Aviva Investors, has expressed views on the diversification of the global stock market, particularly regarding its reliance on technology and the US. Here’s a summary of the situation:
How diversified is the global stock market?
* Geographic Concentration: The global stock market, particularly benchmarks like the MSCI All Country World Index, has a significant concentration in the US. As of March 31, 2025, the US accounted for around 64.6% of the MSCI All Country World Index. Some sources suggest this figure could be even higher, with US stocks accounting for over three-quarters of the top 250 stocks in the FTSE All-World index by weight. While diversification across regions is important, the long-term outperformance of the US market has led to this increased weighting.
* Sector Concentration (Technology): The technology sector holds a substantial weighting in the global stock market. Dean Cook notes that approximately 25% of the global market capitalization is made up of the technology sector. This is further amplified by the “Magnificent Seven” US tech stocks (Microsoft, Nvidia, Apple, Amazon, Meta, Broadcom, Tesla, and Alphabet), which alone accounted for around 20% of the MSCI World Index at the start of 2025. This concentration is a result of the strong performance and earnings growth of these tech giants.
Are global stock markets too tech-heavy and reliant on the fortunes of the US?
Dean Cook and other experts suggest that:
* Tech-Heavy: Yes, global stock markets are indeed tech-heavy. The significant weighting of the technology sector, particularly the “Magnificent Seven,” means that the performance of the overall market is heavily influenced by these companies. While technology is a broad term encompassing many industries, its dominance can lead to concerns about overexposure if these companies face headwinds.
* Reliance on the US: There’s a strong reliance on the fortunes of the US market. The US market’s superior and sustained earnings growth over the last decade (around 9% annually for US corporate earnings compared to 2-3% in Europe and 1% in emerging markets) has driven its increasing dominance in global indices. This means that a significant portion of global equity returns has been driven by US performance.
Implications for Investors:
* Diversification remains crucial: Despite the concentration, diversification across different asset classes, sectors, and geographies remains a core investment principle to manage risk.
* Looking beyond the US: While the US has outperformed, some experts suggest that other regions like Europe and parts of Asia offer lower valuations and improving growth prospects, creating a wider spread of opportunities.
* Active vs. Passive: The strong performance of large-cap US tech stocks has made it challenging for active managers and even some AI-powered ETFs to consistently outperform passive market-cap weighted indices.
In summary, the global stock market exhibits significant concentration in both the US geographically and the technology sector. While this has been driven by strong performance, it raises questions about the overall diversification and potential reliance on these specific areas, as highlighted by Dean Cook and other market observers.

Video courtesy of Interactive Brokershome

Video courtesy of Interactive Brokers