Inflection Points: Rethinking Your Core

2025-05-29 05:25:00 ET

Summary

• Many index-based core equity strategies have changed meaningfully over time, resulting in greater exposure to foreign revenues, increased concentration in fewer stocks, and higher volatility.
• Investing in indexes like the S&P 500 does not ensure that revenue is derived in the U.S.
• But simple revenue and quality screens can reduce exposure to foreign revenues, potentially allowing investors to better target U.S. economic strength.
• Factor-based strategies focused on areas like momentum reversals or quality metrics like cash flow can help reduce portfolio volatility while not losing out on potential upside.

Financial markets seem to be embracing a sense of relief and normalcy with the global trade conflict on hold, despite U.S. tariffs at around 10% on most trading partners and 30% on China. ¹ Markets welcomed the 90-day tariff pause with China and now await further clarity on negotiations, along with updates on U.S. tax and spending policy. ...

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