The three largest S&P 500 index funds now control more than $2.6 trillion in combined assets, with Vanguard's flagship S&P 500 ETF recently crossing the $1 trillion mark on its own, according to data compiled by Apollo Global Management Chief Economist Torsten Slok. Mike Green, Chief Investment Strategist at Simplify Asset Management, estimates passive ownership at roughly 54% of the market and growing at around 4% annually, and warns that if it reaches between 75% and 83%, volatility would break price discovery and could eventually force market closure. Billionaire investor Bill Ackman described the current environment as a bifurcated market, where mega-cap technology stocks attract massive passive inflows regardless of fundamentals, while many other companies trade at cheap valuations. The concentration is fueled by index funds allocating capital according to market capitalization, directing the largest inflows to the biggest stocks and amplifying momentum over value.
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Microsoft CorporationVanguard's S&P 500 ETF crossed $1 trillion, highlighting its massive asset growth and market influence.