AVUV - The Magnitude Of The Difference In Return A Greater Issue Than A Narrow Market

2024-07-08 15:20:00 ET

Summary

• What is notable today is the magnitude of the difference in return between some of the various indices.
• On a year to date basis, the S&P Midcap 400 Index is up just 4.94% as of July 5, 2024, and the Russell 2000 Index of small company stocks is up only .71%.
• One factor contributing to the equal weighted S&P 500 Index outperforming over the long run is the fact that a larger number of stocks contribute to the return.

In evaluating the recent investment market and economic data, it is notable the amount of the data that is providing conflicting signals. One equity market factor that currently stands out is the seemingly narrowness of the market. S&P Dow Jones Indices has noted in their prior research work that narrowness itself, or lack of market breadth, is not uncommon. What is notable today is the magnitude of the difference in return between some of the various indices. For example, since S&P launched the S&P 500 Equal Weight Index back in 2003, with back-tested data to 1970, this index has outperformed the cap-weighted S&P 500 Index as seen in the below chart....

For further details see: