Ninety One says ten US stocks now carry 40% of the S&P 500

Ten stocks now account for roughly 40% of the S&P 500, the highest concentration in decades, and that single number is the strongest argument the active management industry has been handed in years.

The figure came from Natalie Phillips, who holds the deputy managing director role at Ninety One’s South African business, in a conversation about active and passive investing published by Moneyweb on 15 September 2026. Her case is not that passive investing has failed. It is that the American index has quietly become a bet on a handful of companies, and that most investors holding it have not chosen that bet on purpose.

Phillips said the returns out of passive products have been excellent, and she gave the market its due. The problem, in her reading, is what sits underneath the return. When a fund tracks market capitalisation, the largest companies get the largest weights automatically, whether or not those weights still make sense. Valuations across the American market are running above their long run averages. The concentration and the valuations have arrived together.

What the concentration actually costs a South African

A pension fund member in Gqeberha or Polokwane who holds a global passive fund is, without having signed anything to that effect, heavily exposed to the same small group of American technology companies that every other passive investor in the world holds. That is not diversification. It is a crowd.

Phillips made the point that the winners of tomorrow are not guaranteed to be the winners of today. Alphabet has returned about 66% and Nvidia about 41%, she said, and even inside that group the outcomes have differed sharply. She referred to a set of Asian focused companies that Ninety One calls the Secret Seven, and argued that the next round of market leadership is unlikely to look like the last one.

Active managers adapt when market leadership changes. That is the claim, and it is testable rather than mystical. The question for a South African investor is whether the fee difference is worth paying for that adaptation. Phillips did not pretend the answer is automatic. Her argument is that in specific markets, and emerging markets above all, the dispersion between good and bad outcomes is wide enough that stock selection earns its keep.

Living in an emerging market is not the same as being invested in one

The sharper part of the conversation was aimed squarely at South African investors, and it is worth repeating carefully.

Many local investors assume they already carry emerging market exposure because they live in one. Phillips rejected that reasoning. The JSE has its own sector mix and therefore its own risks, and it has performed exceptionally well, particularly through the recent gold run. But holding the JSE is not the same thing as holding emerging markets. The correlation between emerging market excess returns and the local market sits at around 0.15%, which is close to no relationship at all.

That low correlation is the practical point. Adding emerging market exposure on top of a South African portfolio can produce a more diversified portfolio, shallower drawdowns and competitive returns, because the two sets of assets do not move together.

Phillips pointed to the region known as the Valeriepieris circle, where 54% of the world’s population lives, largely across Asia. By 2030, 57% of global GDP growth is expected to come from countries inside that circle, China and India among them. Companies in biotech and artificial intelligence sit there at valuations cheaper than their American equivalents.

Her closing argument was about access. A passive emerging market strategy will not necessarily capture those listed opportunities, because they are heavily underrepresented in the MSCI All Country World Index. The index does not hold what the index does not weight.

What this means for the money you actually have

The debate between active and passive is usually staged as a contest with a winner. Phillips declined that framing, and she is right to. The two approaches do different jobs. Passive gives cheap, broad exposure and has rewarded investors well for years. Active gives a manager room to move when the composition of a market stops matching the economy behind it.

The South African consequence is straightforward. Local retirement savings are increasingly routed into global passive funds, which means more of this country’s long term capital now tracks the same ten American companies. Whether that is a problem depends on whether those ten companies keep winning. That is a question no index can answer, and it is the question every trustee of a South African retirement fund should be putting to whoever manages the money.

Ninety One is an active manager and stands to gain from that argument, which readers should weigh accordingly. The concentration figure does not depend on who supplied it. It is visible in the index itself.

Source: Moneyweb, Active vs passive: why investors may need to rethink the balance