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Is the S&P 500 a Value, Core, or Growth strategy?

Is the S&P 500 a Value, Core, or Growth strategy? It depends.

Market cap weighting schemes in popular indices have caused interesting skews in 2020. Through the end of July, large caps on a market cap weighted basis have outperformed the same stocks using equal weighting by more than any year in the past few decades, including the 1999 Tech Bubble. The divergence since the start of 2015 has been extreme, with market weighting outperforming equal weighting by roughly 30% on a cumulative basis.

Applied Finance Database Largest 500 Constituents, US, 12/31/14 – 7/31/20.

Applied Finance Database Largest 500 Constituents, US, 9/30/98 – 7/31/20.

The push in megacap stocks has caused index concentration to be at the highest levels since the 1970’s. Additionally, the Covid-19 pandemic and drop in interest rates has led investors to favor Growth stocks so far this year, exacerbating the trend.

Furthermore, the equal weight S&P 500 index fund (RSP) has now crossed into the Value territory instead of the Blend/Core area, using Morningstar style boxes.


Investors should be aware of these patterns as they develop. Historically, sizable outperformance from market cap weighted large cap stocks has reversed significantly and eventually benefitted strategies and indices that equal weight.


  • John Holt, CFA joined Applied Finance in 2014 and is involved in the management of both quantitative strategies and analyst driven strategies.


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