The powerful S&P 500 rally since the Mar. 23 low doesn’t necessarily match what’s going on inside diversified equity
That’s because a narrow group of stocks in a narrow group of sectors has been carrying the market, representing a meaningful share of the index’s gains.
The five largest stocks in the S&P 500 by market value—known as FAAMG—have done the heavy lifting and are the top contributors to the gains: Facebook, Apple, Amazon, Microsoft, and Alphabet (Google). Another 18 stocks have provided
outsized returns as well.
We think the mismatch in performance between many diversified equity portfolios and these stocks that have contributed the most to the S&P 500’s gains will sort itself out over time, as the market works through its bottoming and recovery processes, to the benefit of diversified portfolios.
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