We can try to get away from Donald Trump and focus on our business – but there is no escaping him! investing in concentrated markets
Consider the current market in India, Australia or the 80-pound gorilla, the United States. The global economy is ambling through a landscape marked by reduced growth and heightened policy risks. Asset markets are sending mixed signals: a few parts of the stock market surge while the rest are falling back. The game has changed.
Let’s begin with the growth backdrop. Below are some advanced and emerging economies with their growth and how they have responded to the Trump tariffs:
This shows that advanced economies are expanding at less than 2%. Emerging markets like India show faster growth, but even there, the pace is decelerating. China has both opposed Trump and grown, while Russia, embroiled in war, has slowed to a crawl.
Simultaneously, this Yahoo chart shows precious metals up ~65-75 % this year, while the S&P-500 and cryptos show more modest ~15 %+ gains.
Moderate growth, large hedging flows and low broader equity returns – paints a picture of investor caution: the S&P 500 is now highly concentrated in its top companies. Nvidia, Microsoft, Apple, Amazon, Alphabet – accounted for 27 % of the index by weight in 2025. In addition, less than ten names accounted for well over one-third of the market’s performance. investing in concentrated markets
The risk of concentration is real. When a handful of mega-cap stocks dominate the index, your “diversified” S&P-500 allocation might really be dominated by those same few names. Any weakness in one or more of them could disproportionately damage your return. This has been called the worst dislocation between the S&P and its equal-weight counterpart in decades.
The investment mindset has changed. If you buy a plain S&P ETF, your exposure is passively – and heavily – tilted toward the largest technology/AI firms. Combined with moderate US growth, it means you aren’t buying a secular boom – you’re buying a very selective winner’s story.
Hedging becomes critical. In a world of moderate growth and high concentration risk, defensive assets such as precious metals or inflation hedges aren’t optional extras – they become strategic complements. The surge in gold and silver suggests markets are hedging inflation, policy-risk or currency uncertainty. For an investor in India, Australia or the US, that means allocating a meaningful portion (say 30-50%) to hedges is justified, even if the core remains equities. investing in concentrated markets
Global diversification matters. Emerging markets like India appear to offer higher growth potential. Yet many of those economies carry higher policy, alignment and currency/structural risk. That makes them complementary, not primary, anchors for a portfolio. For a US or Australian investor, a tilt toward faster‐growing markets is appropriate – but one that is modest and currency‐aware:
- Core (~50-60%): US large-cap via S&P-500 or equivalent. But recognise the risks and lean toward quality and balance rather than growth-only.
- Growth tilt (~20-25%): Emerging markets (India, South Korea, Mexico, etc.).
- Hedge/defensive (~20-25%): Precious metals (gold, silver), inflation hedges and possibly more stolid equities. investing in concentrated markets
Country‐specific suggestions:
- India: The domestic economic growth is faster but hedge against currency and inflationary risk if you are abroad. Motilal Oswal S&P 500 Index Fund and Nippon India ETF S&P 500 mirror the S&P 500.
- Australia: US large-caps form a viable core, but Australia’s moderate growth means that you will benefit from global diversification. Consider S&P-500 tracking ETFs like the iShares Core S&P 500 ETF (ASX: IVV) and the SPDR S&P 500 ETF Trust (ASX: SPY)
- US: Your home market remains central, but visible concentration means you should be particularly mindful of internal diversification.
We are in a narrow bull market led by a few megacaps, set against a backdrop of moderate economic growth and elevated uncertainty. Simply mirroring the S&P 500 comes with concentration risks that can be mitigated by adding global diversification.
As ever: please speak with a qualified financial advisor who can tailor these insights to your individual situation. In a world of narrow rallies and broad uncertainties, the smart investor builds a structure that survives the surprises.
Disclaimer: the author is a US-based commentator. As of this writing, he has long positions in the S&P 500 index and crypto. He is not a financial advisor and does not recommend investments.
Read more: H1Bs: Countering the latest nakedly anti-India narrative
