Stock market wealth is becoming more concentrated than ever – why does that matter?
27 April 2026
Research from the University of Strathclyde has shown that just 3% of UK stocks account for all the net wealth generated in the British stock market, a trend that has intensified since deregulation in the 1980s. The findings challenge conventional wisdom about diversification and raise important questions for investors, pension funds and policymakers about how markets really work.
The logic of investing in the stock market using a ‘buy-and-hold’ strategy might seem straightforward: spread your money across a range of companies, include solid performers, and over time you should do well.
But research from Strathclyde, published in the Journal of Asset Management, suggests something far less intuitive is at work.
Looking at the performance of UK-listed firms over nearly 50 years, from 1975 to 2024, researchers found that just 3% of companies accounted for all the net wealth created by the market – in other words, the extra value created above what investors could have earned in safer assets such as cash or government bonds.
Although nearly half of firms – 46.5% – generated positive real wealth over the period studied, long-term gains remained concentrated among a very small minority of companies.
The finding highlights a fundamental tension at the heart of investing. While active management aims to identify tomorrow’s winners, the extreme concentration of wealth creation means that long-term returns are driven by a very small number of exceptional companies.
The analysis builds on earlier work by Hendrik Bessembinder, whose influential 2018 paper, Do Stocks Outperform Treasury Bills?, found that around 4% of US stocks accounted for all net wealth creation in the market since 1926.
“It is a finding that challenges some of the most widely held assumptions about investing,” says the study’s lead author, Professor Jonathan Fletcher, from Strathclyde’s Department of Accounting & Finance.
“Rather than a broad field of steady performers, the stock market looks more like a game of extremes where a tiny number of exceptional winners drive returns, and missing them can mean missing almost everything.”
The Strathclyde study – which examined all stocks on the London Stock Exchange, including the Alternative Investment Market and the Unlisted Securities Market – reveals not only how pronounced this effect is in the UK, but how it has changed over time.
A particularly striking finding is that wealth creation has become increasingly concentrated. Before the financial ‘Big Bang’ reforms of the London Stock Exchange in 1986, returns were more evenly distributed across firms, and a larger proportion of companies generated positive long-term outcomes for investors.
In the decades since, however, the market has become more winner-takes-all, with a smaller number of firms accounting for a greater share of total wealth creation.
Before deregulation, wealth creation was less concentrated: roughly the top 28% of companies accounted for the market’s total inflation-adjusted gains, rather than a small minority.
“The shift reflects deeper changes in how markets operate, including deregulation, globalisation and the growing dominance of large multinational companies,” says Professor Fletcher.
Rather than a broad field of steady performers, the stock market looks more like a game of extremes where a tiny number of exceptional winners drive returns, and missing them can mean missing almost everything.
Department of Accounting & Finance
What does this mean for investors & markets?
The research does not prescribe specific investment strategies, but it highlights how unevenly market returns are distributed.
The findings help explain why consistently beating the market is so difficult. If only a small fraction of stocks generate meaningful long-term gains, investors face a simple but daunting challenge: identifying those rare winners in advance.
Many companies that ultimately succeed do not appear exceptional at the outset, while others that initially seem promising fail to deliver.
The research may also help explain the rise of passive investing – tracking the market as a whole rather than selecting individual shares. By holding a broad index, investors increase the likelihood of owning the small number of companies responsible for much of the market’s long-term performance.
Co-author Michael O’Connell says the findings underline how difficult stock selection can be.
“One takeaway from this study is that, if you are investing in a stock over any time period – a month, a year, a decade – there is a high chance it will produce a return lower than that of a government bond or gilt,” he says.
“It’s far more difficult than people think to choose a high-return stock.”
One takeaway from this study is that, if you are investing in a stock over any time period – a month, a year, a decade – there is a high chance it will produce a return lower than that of a government bond or gilt.
Department of Accounting & Finance
Ethical investment concerns
The research also raises questions about the nature of the companies that generate long-term wealth. Historically, some of the largest contributors to market returns have come from sectors such as energy – industries that many investors now approach with caution for environmental or ethical reasons.
This creates a tension at the heart of modern investing. Avoiding certain sectors may align with personal values, but it can also mean excluding firms that have historically generated strong returns.
While the findings point to an increasingly concentrated pattern of wealth creation, researchers note that debate continues over how best to measure long-term market performance.
Some academics have questioned whether comparing stock returns against Treasury bills or bonds may overstate the number of firms that underperform, while alternative measures can produce different estimates of concentration. Even so, evidence from multiple studies and markets suggests a consistent pattern: a relatively small number of companies account for a disproportionate share of long-term gains.
Taken together, the findings suggest that stock market returns may be far less evenly distributed than many investors assume. Rather than broad-based growth across most firms, long-term wealth creation appears increasingly concentrated among a small number of exceptional performers – with implications for how investors think about diversification, risk and market structure.
Important note: this article is for information only and does not constitute financial advice.
