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Concentration Impact on Style Indices

July 30, 2020

Big 5 companies surge in index concentration… what will be the effect on style boxes and cap-weighted portfolios?

The recent surge has notable impacts on commonly-used style index construction methodologies. Due to the increased reliance on passive allocations, investors should be aware of the significant distortions regarding style index diversification and skews in the classification assigned to individual stocks. […more]

Valuation and Concentration of Top 5 Market Cap Stocks in S&P 500

July 23, 2020

Are the Big 5 stocks in S&P500 (FAAMG) overvalued?

Despite concentration levels unseen since the early 1970s, this group of 5 stocks currently offers reasonable valuation characteristics. The valuation characteristics of these five stocks warrants ongoing monitoring to ensure valuation does not deteriorate. […more]

The False Bargain of Passive Investing

July 14, 2020

Today the irony continues, as the intellectual foundations in financial economics that underpinned Bogle’s incredible success are much less robust than they appeared in the early 70’s, yet the push for passive investing is stronger and more fervent than ever. For proactive, process-oriented, intelligent advisors this will create a great opportunity to distinguish yourself from the growing herd of “commodity” advisors who preach little more than fee minimization, rather than alpha generation or negative alpha avoidance. […more]

Will the Mega Cap Dominance Continue?

July 10, 2020

The largest few companies in the US have dominated performance over the past 4-5 years. The recent Covid-19 pandemic has intensified this trend in recent months. In particular, the largest five companies the in US […more]

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