August 2023
The markets, in particular, the US have had a very good 2023.
At the end of August 18, the S&P 500 Index was up 14% year-to-date, driven higher mostly by the optimism surrounding the impact of artificial intelligence. However, if you take out the top 10 companies in the index, the S&P 500 return falls to roughly 5% year to date.
As a result, the top 10 companies in the S&P 500 now account for 30% of the index. This is the first time in modern history that the top 10 holdings account for 30% of the entire S&P 500.
While this stat in itself isn’t surprising. (There are many reasons that may justify the current high values including that we are likely getting close to peak interest rates and these companies have had better-than-expected quarterly earnings). We should be thoughtful of the risks.
Here is a chart showing the % companies and their % weight in the S&P500 over the past several decades
Historical Top 10 Holdings for the S&P 500 (% Index Weight)
Source: Bloomberg, as of July 31, 2023.
Some questions to consider:
- What is my exposure to these top 10 companies?
- What’s my current exposure today when looking at all my investments?
- Am I comfortable with this amount of exposure purely from a risk management perspective?
How each person reacts to the finding of these results will vary, as will their decision on how to react. It’s a good time to review portfolio positioning and make sure that there aren’t any unintended risks, given the concentration in returns this year.
Here are the overall results year to date:
| Index | YTD |
|---|---|
| TSX/S&P (Canada) | 2.04% |
| S&P 500 | 13.96% |
If you have any questions, feel free to reach out.
Source: www.marketwatch.com
iA Private Wealth Inc. is a member of the Canadian Investor Protection Fund and the Canadian Investment Regulatory Organization. iA Private Wealth is a trademark and a business name under which iA Private Wealth Inc. operates.
This is not an official website or publication of iA Private Wealth and the information and opinions contained herein do not necessarily reflect the opinion of iA Private Wealth. The particulars contained on this website were obtained from various sources which are believed to be reliable, but no representation or warranty, express or implied, is made by iA Private Wealth, its affiliates, employees, agents or any other person as to its accuracy, completeness or correctness. Furthermore, this website is provided for information purposes only and is not construed as an offer or solicitation for the sale or purchase of securities. The information contained herein may not apply to all types of investors. The Investment Advisor can open accounts only in the provinces where they are registered.
Products and services provided by third parties, including by way of referral, are fully independent of those provided by iA Private Wealth Inc. Products offered directly through iA Private Wealth Inc. are covered by the Canadian Investor Protection Fund, subject to exception. iA Private Wealth Inc. does not warrant the quality, reliability or accuracy of the products or services of third parties. Please speak to your advisor if you have any questions.
Proudly built and managed by Sommer Digital Inc.