Broader Leadership, Broader Opportunity

Over the last several years, a handful of mega-cap technology companies, widely known as the “Magnificent 7” or “Mag 7,” have carried the weight of equity market returns. In the US, the Mag 7 accounted for roughly 63% of S&P 500 Index returns in 2023 and 55% in 2024, underscoring how concentrated market leadership had become. However, more recently, that concentration has started to ease, with share of returns falling to roughly 43% in 2025 as performance broadened beyond the small handful of names.¹

This shift in market leadership has also been seen in global equity markets. Within the MSCI World Index, the percentage of companies outperforming the overall index return rose to 61% year to date in 2026, a notable improvement from 29% in 2024 and 41% in 2025.² This increase suggests market participation is becoming healthier and more balanced, with gains being supported by a much wider range of companies rather than concentrated in a narrow leadership group.

A supportive macro backdrop may also be driving broader market participation. Possible key factors include earnings growth expectations widening beyond the handful of megacap names, a weaker US dollar and relatively more attractive valuations seen outside the US supporting international equities.³ This shift may be creating a more balanced environment, one in which stock selection could matter more than having exposure to a handful of dominant names.

As more companies and sectors contribute to earnings growth and market leadership, we believe the opportunity set for active, selective investors has become much more favorable, particularly for investors focused on identifying durable, quality businesses beyond the famous Mag 7. Selective investors may also be better positioned to uncover differentiated businesses that may have been overlooked during the periods of narrow market leadership.