Most Americans who invest do it without ever picking a single stock. They put money into an index fund, usually one that tracks the S&P 500, and let the market do the work.
For years, that felt close to a free lunch. Buy the whole market, keep costs near zero, and ride the long climb of American business.
The catch is that the S&P 500 stopped being the whole market in any real sense. A small cluster of technology giants now sits at the top, and their combined weight has grown so large that owning the index means making an outsized bet on a handful of names.
Seven stocks, the group often called the Magnificent 7, made up about 32.5% of the S&P 500 as of July 2026, according to The Motley Fool, which drew on figures from Stock Analysis.
So when the second largest money manager on the planet decides to sell investors more ways to own American stocks right now, it is worth asking why.
That is what Vanguard just did, rolling out four new U.S.-focused exchange-traded funds (ETFs). The way they are built tells you what it thinks the concentration problem has created: demand.
Why U.S. market concentration has investors nervous
A market-cap-weighted index gives the biggest companies the biggest slice. When those companies keep winning, the index quietly turns into a concentrated position dressed up as diversification.
That is not a hypothetical worry anymore. It is the math of the current U.S. market.
For a sense of the broader stakes, see TheStreet’s coverage of Goldman Sachs’ stock market forecast through 2035.
Here is how top-heavy American benchmarks have become:
- The top 10 S&P 500 stocks now account for roughly 40% of the index, according to Lord Abbett.
- Inside the Russell 1000 Growth Index, the top 10 holdings top 60% of the whole index, according to Lord Abbett.
- Nvidia (NVDA) alone makes up about 21% of the Magnificent 7’s combined value, according to The Motley Fool.
When I ran Vanguard’s new lineup against the funds it already sells, one thing stood out. Every new product is a tool for slicing U.S. exposure into pieces, rather than swallowing the whole cap-weighted market in one gulp.
That matters for a normal investor more than it sounds. If your retirement account is a single S&P 500 fund, a bad stretch for a few artificial intelligence (AI) companies can drag down years of savings, even if the other 493 businesses are doing fine.
The subtler version of the risk is baked into how the index works. Because a cap-weighted fund buys more of a stock as it climbs, your monthly contribution keeps flowing into whatever is already the most expensive, on autopilot.
Michael M. Santiago / Getty Images
What Vanguard’s four new ETFs actually do
The four funds are the Vanguard Russell 1000 Growth ETF, the Vanguard Russell 1000 Value ETF, the Vanguard Russell Mid-Cap ETF, and the Vanguard Russell 2000 Small-Cap ETF, according to ETF Express.
They are built as low-cost building blocks so investors can tailor U.S. exposure by style and by company size, Vanguard said in a company statement.
More ETFs:
- ARKK bleeds $313 million as investors pull out
- Bank of America answers a tough stock market question
- Fidelity, State Street ETFs cost the same, but one pays you more
Growth strategies lean harder into technology and AI names, while value strategies help pull a portfolio away from the segments that have driven recent gains, the firm said, according to Funds Europe. The mid-cap and small-cap funds stretch the picture past the mega-caps entirely.
The fees are the part that gets my attention. The growth and value funds carry ongoing charges of 16 basis points, and the mid-cap and small-cap funds cost 20 basis points, according to ETF Express.
Head of Product for Europe Claire Aley said the funds expand Vanguard’s “range of low-cost building blocks,” according to ETF Express.
One detail changes who this news is really for. These are UCITS funds, short for Undertakings for Collective Investment in Transferable Securities, a European regulatory wrapper, and they list on exchanges in London, Frankfurt, Amsterdam, Milan, and Zurich.
U.S. investors generally cannot buy European-listed UCITS funds through a domestic brokerage account. So the launch is aimed at Europe, even though the stocks inside are all-American.
What the launch means for your U.S. stock exposure
Do not let the European listing fool you into thinking this has nothing to do with your money. The strategy behind it is the useful part.
Vanguard is betting that investors want to own U.S. stocks in slices, not as one undifferentiated block. That is a read-on-demand from a firm that manages trillions and rarely guesses wrong about where retail money is heading.
The good news for a U.S. reader is that you already have the domestic version of this toolkit. Vanguard sells U.S.-listed funds built on the same Russell indexes, including the Vanguard Russell 1000 Growth ETF (VONG), the Vanguard Russell 1000 Value ETF (VONV), and the Vanguard Russell 2000 ETF (VTWO).
Related: U.S. asset managers make bold AI ETF move
VONG charges just 0.06%, according to Vanguard, which makes precise style tilting almost free. On a $50,000 position, that fee works out to about $30 a year.
Held inside a tax-advantaged account like an individual retirement account or a 401(k), swapping some broad-market exposure for a style or size tilt does not trigger a taxable event, so the cost of adjusting is close to zero.
My analysis of the fee card is simple. The cost of taking control of your U.S. exposure has fallen to the point where there is little excuse to leave it on autopilot inside one crowded index.
None of this is a recommendation to buy any specific fund, and splitting your holdings by style and size is a real diversification decision with real tradeoffs, not a guaranteed win. Growth can keep beating value for years, and small caps can lag for a decade.
But the option now costs pennies, and that is new.
The next Vanguard move to watch
The interesting question is what Vanguard does at home. If European investors get a full menu of style and size building blocks, U.S. retail investors will eventually ask for the same clarity in their own accounts.
Concentration is not going away on its own. As long as a few AI-driven giants set the tone for the entire market, the demand for precise, cheap ways to step around them will keep climbing.
Vanguard just showed which way it thinks that demand is running. The firm that taught America to buy the whole market is now busy selling investors the pieces.
Related: Vanguard sends wake-up call to every retiree
