S&P 500

The index of 500 large US companies maintained by S&P Dow Jones Indices, weighted by the market value of shares available to the public. It is the usual benchmark for US equity funds and the index most global investors mean when they speak of the US market.

A company with $300 billion of free-float market value in an index worth $50 trillion carries a weight of 0.6%. Membership is decided by a committee whose rules cover size and liquidity as well as profitability, so it isn't simply the 500 largest companies.

Weighting by value makes it concentrated. In recent years its ten largest members have made up more than a third of the index, so its return has depended heavily on a few technology companies, and an investor buying it is making a larger bet on them than the name suggests.

Check the top ten before you call it diversified.