Vanguard’s S&P 500 exchange-traded fund crossed $1 trillion in net assets in June 2026, becoming the first ETF to reach that threshold in industry history, Morningstar reported.
Investors directed more than $400 billion of net new money into the fund between June 2021 and May 2026.
Warren Buffett told Berkshire Hathaway shareholders in his 2013 letter that his instructions to the trustee managing a cash bequest for his wife’s benefit directed 10% into short-term government bonds and 90% into a very low-cost S&P 500 index fund, naming Vanguard as his suggestion.
Most of that capital arrived on a straightforward premise: Buying 500 stocks in one low-cost vehicle delivers broad diversification across American business.
That assumption held up for decades until a shift in the index changed what shareholders actually owned in the fund.
S&P 500 concentration inside VOO has reached an all-time record
The 10 largest stocks in the S&P 500 controlled 40.8% of the full index as of May 2026, J.P. Morgan Asset Management reported.
That figure exceeds the prior peak of 26.6%, set at the height of the late-1990s technology bubble, the firm noted.
A decade ago, the top 10 held roughly 19% of the benchmark, and their combined weight has approximately doubled since then, RBC Wealth Management indicated.
Nvidia, Apple, Microsoft, Amazon, and Alphabet lead VOO’s holdings today. Eight of the top 10 positions are directly tied to the artificial intelligence investment cycle: those five names, plus Broadcom, Alphabet’s Class C shares, and Meta. JPMorgan Chase and Berkshire Hathaway round out the top 10.
Together, the top 10 hold roughly 37% of every dollar that enters the fund, according to Vanguard’s most recent disclosure. The remaining 500-plus holdings divide the rest.
Every dollar that enters a cap-weighted index fund such as VOO is distributed in proportion to each company’s market value, not its fundamentals or earnings power.
That structure sends the biggest share of new capital to the names already at the top, reinforcing the tilt with each round of inflows.
VOO’s technology tilt dwarfs the sector’s share of the broader economy
The information technology sector alone accounts for roughly 35% of VOO’s total portfolio weight, according to Vanguard’s most recent disclosure.
Combined with tech-adjacent companies now classified under communication services (Alphabet, Meta), effective technology exposure exceeds 38% of the fund.
That is well above the sector’s roughly 20% share a decade ago and sits above IT’s long-run average weight in the index.
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The information industry generated just 5.6% of U.S. gross domestic product in the first quarter of 2026, according to Federal Reserve Bank of St. Louis data. VOO’s technology allocation runs more than six times that figure.
The index weights companies by market value, but the gap highlights how much the fund’s composition has changed. Many investors still associate S&P 500 exposure with a broad slice of American businesses.
Elevated valuations raise the stakes for current VOO holders
The S&P 500’s cyclically adjusted price-to-earnings ratio, a measure developed by economist Robert Shiller, stood at 42.17 in late August 2026, Multpl showed.
The historical median for the Cyclically Adjusted PE (CAPE) ratio is 16.11, making the current reading roughly 2.6 times the long-term norm.
The CAPE has exceeded today’s level only during a 17-month stretch from April 1999 to August 2000, when the ratio exceeded current readings in 13 of those months before peaking at 44.19 in December 1999.
The top 10 S&P 500 stocks trade at roughly 26 times earnings, about 25% above their long-term averages, the firm’s research indicated.
Goldman Sachs projects weaker returns as S&P 500 concentration persists
Goldman Sachs’ equity strategy team has projected an annualized nominal total return of just 6.5% for the S&P 500 over the coming decade.
David Kostin, advisory director at Goldman Sachs, led that forecast, which would place it in the seventh percentile of 10-year returns since 1930, the firm reported.
The S&P 500 returned about 13% annually over the past decade, well above the index’s long-term average of roughly 11% since its creation in 1957, according to Goldman Sachs.
Concentration ranking near the highest level in 100 years was one of the primary factors behind the subdued projection.
Mitch Goldberg, president of ClientFirst Strategy, told CNBC in August 2026 that overreliance on the S&P 500’s recent winners creates a hidden behavioral risk for investors who mistake past performance for a guarantee.
“Diversification helps you avoid becoming dependent on yesterday’s winners, which is a form of recency bias.”
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The firm also projected that the equal-weight version of the S&P 500 would outperform the standard cap-weighted index over that same period.
What VOO’s concentration means for the next 10 years of returns
VOO’s low-cost structure, the feature Buffett highlighted in 2013, remains intact, but the diversification half of that premise has shifted materially.
The fund’s composition now tilts heavily toward a small group of AI-linked megacaps, a structural shift with direct implications for forward returns.
The decade-ahead projection from Goldman Sachs is below the annualized gains shareholders earned over the past 10 years.
Concentration and elevated valuations have been cited as the primary drivers behind that gap. Top-10 earnings growth is the fundamental support for current index weights, making it the key variable to watch alongside the concentration itself.
Liz Ann Sonders, chief investment strategist at Schwab Center for Financial Research, noted on the firm’s On Investing podcast in May 2026 that just three companies, Alphabet, Amazon, and Meta, drove roughly 70% of the upward revision to full-year S&P 500 earnings estimates in dollar terms.
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