MARKET CONCENTRATION: S&P 500
As of 2025, the top 10 companies make up roughly 38% of the S&P 500’s total market capitalization, a sharp increase from about 17% in 2015. This concentration means that the index’s performance is now disproportionately driven by a handful of mega-cap stocks, creating a risk that market outcomes are overly dependent on these few companies. As a result, the S&P 500 offers less diversification than its broad name might suggest.
FIXED INCOME: YIELD CURVE
A yield curve is a graph that shows bond yields (interest rates) across different maturities, with the X-axis representing time to maturity and the Y-axis representing yield, or annualized return. There are several variations of yield curves, each reflecting different economic conditions. A normal yield curve, which slopes upward, indicates that long-term bonds yield more than short-term bonds and often signals expected economic growth.
An inverted yield curve, which slopes downward, occurs when short-term yields are higher than long-term yields and is commonly viewed as a recession signal. A flat yield curve shows similar yields across maturities, reflecting market uncertainty. Investors use the yield curve as a tool to gauge expectations for interest rates, inflation, and overall economic conditions. It guides decisions on duration strategy—whether to hold short- or long-term bonds—and helps anticipate economic cycles such as periods of growth or recession.
Additionally, the yield curve informs risk management by balancing interest rate and credit risks, and it plays a key role in portfolio construction by helping investors weigh yield opportunities against safety.
FIXED INCOME: DURATION
The current yield curve in 2025 is upward sloping overall, though it shows a dip at the short end around the 2-year maturity. In the 1-month to 2-year segment, short-term yields ranging from 3.7% to 4.5% remain heavily influenced by Federal Reserve policy, while in the 10- to 30-year segment, long-term yields between 4.3% and 4.9% reflect ongoing inflationary pressures and fiscal concerns.
Compared to five years ago, the entire curve has shifted significantly higher across all maturities. For investors, the normal upward slope suggests expectations of stable economic growth and moderate inflation, while the spread between short- and long-term maturities remains a critical indicator for monitoring potential recession risks