How to Diversify Away From US Tech at Fidelity
For Mid-career investors worried about tech concentration · Based on Scribner Fidelity Index Fund Selection Framework
// TL;DR
If you're a mid-career investor uneasy about how much of your S&P 500 fund sits in a handful of mega-cap tech stocks, this framework shows you how to diversify. Because Fidelity funds are market value weighted, roughly 39% of FXAIX flows into the top 10 tech holdings. Adding FSPSX (International Developed Markets, only ~10% tech) reduces that concentration. Use the 3-fund model—domestic equity, FSPSX international, and FXNAX bonds—sizing your international sleeve with JP Morgan's 25–30% equity benchmark, all governed by the 120 Rule for your age.
Why is my S&P 500 fund so concentrated in tech?
Because Fidelity's major index funds are market value weighted—larger companies receive a proportionally larger share of every dollar you invest. As of 2026, roughly 39% of every dollar in FXAIX flows into just the top 10 holdings, all technology-related, with about 15 cents of every dollar going into Nvidia and Apple alone. This isn't a flaw in the fund; it reflects the actual top-heavy shape of the US market. But if you're mid-career and want to reduce reliance on a handful of mega-caps, you can restructure.
A common mistake is assuming FSKAX (Total Market) fixes this. It doesn't—because of market value weighting, FSKAX and FXAIX have become increasingly correlated, and switching between them provides marginal diversification benefit.
How does FSPSX reduce my tech exposure?
FSPSX (Fidelity International Index Fund, 0.035% expense ratio) tracks developed markets outside the US—Japan, the UK, Switzerland, Germany, France, Australia. Its largest sectors are Financials (~24%) and Industrials (~20%), with tech at only about 10%. That's structurally different from FXAIX's ~38% tech weighting. Adding FSPSX meaningfully diversifies you away from US single-country and single-sector concentration.
Crucially, understand the International as Diversification, Not Outperformance principle: the goal isn't to beat the S&P 500. Expect lower tech concentration and possibly lower recent returns in exchange for broader global exposure. If you're chasing higher returns, FSPSX isn't your tool—if you're managing concentration risk, it is.
How much international exposure should I add?
Use JP Morgan's benchmark of 25–30% of your total equity allocation going into developed non-US equities as a starting reference. Apply that percentage to your equity sleeve, not your whole portfolio.
Consider a 45-year-old worried about US tech over-concentration. First, the 120 Rule: 120 − 45 = 75% stocks, 25% bonds. Then split the 75% equity sleeve using the 25% international benchmark: roughly 56% FXAIX (domestic) + 19% FSPSX (international) + 25% FXNAX (bonds). That's the 3-fund portfolio in action—domestic equity, international equity, and bonds working together.
Should I just avoid tech-heavy funds entirely?
No—complete avoidance isn't the goal, and it's not practical since US market returns have been driven largely by these companies. The framework is about right-sizing concentration to your comfort level, not eliminating it. You keep a substantial domestic equity position (FXAIX or FSKAX) as your core and use FSPSX to dial down single-country dependence. This balanced approach preserves growth potential while reducing the risk that a tech downturn devastates your entire portfolio.
What about my bond allocation as I approach retirement?
As a mid-career investor, your bond sleeve grows in importance. FXNAX (0.025% expense ratio) is designed for stability and income, not growth—its ~4.4% 30-day yield is the primary return driver. Its portfolio is roughly 45% US Treasuries, 26% corporate bonds, and 23% mortgage-backed securities. The 120 Rule already increases your bond percentage as you age, and you should recalibrate every five years to keep shifting from growth-oriented to stability-oriented.
Next step: Run the 120 Rule for your age, then split your equity sleeve using the 25% international benchmark to build a 3-fund portfolio of FXAIX, FSPSX, and FXNAX. Place all three orders inside Fidelity under Trade and set a five-year recalibration reminder.
// FREQUENTLY ASKED QUESTIONS
Does adding FSPSX guarantee better returns than an S&P 500 fund?
No—FSPSX is for diversification, not outperformance. Its purpose is to reduce reliance on US mega-cap tech, and it may deliver lower recent returns than the S&P 500 in exchange for broader global exposure. Adding it lowers your single-country and single-sector concentration risk, but you shouldn't add it expecting to beat the US market.
Is FSKAX more diversified than FXAIX for reducing tech exposure?
Only marginally—both are heavily tech-weighted due to market value weighting and have become increasingly correlated. Switching from FXAIX to FSKAX won't meaningfully reduce your tech concentration. To actually diversify away from US mega-cap tech, add FSPSX international (only ~10% tech) rather than swapping between two domestic funds.
What percentage of my portfolio should be international at age 45?
Applying JP Morgan's 25% international benchmark to a 45-year-old's equity sleeve gives roughly 19% of the total portfolio in FSPSX. With the 120 Rule setting 75% stocks and 25% bonds, that works out to about 56% FXAIX domestic, 19% FSPSX international, and 25% FXNAX bonds. Adjust the international split within the 25–30% reference range based on your comfort level.