Three Forces Pushing Holdings Beyond the Optimal Range
U.S. 1975·U.K. 1985
drop in commission costs, falling from upwards of 5% per trade to near zero, naturally enabling investors to own more securities
1980s onward
securities now easily managed per portfolio, as computing power, electronic ledgers, and the internet lowered the incremental cost of each additional holding
1970s onward, ongoing
of about $65.8 trillion in global AUM controlled by the 20 largest managers in 2025; at the scale of these managers, more holdings are needed to deploy capital efficiently
Combined effect: the typical active equity fund now holds 50–100 stocks, and investors with multiple managers may hold 1,000 or more underlying positions, far beyond the 20–50 range supported by decades of research.