US equity market concentration presents both risks and opportunities

Wednesday 27 December 2023

Investment Talks

   

US equity market concentration presents both risks and opportunities

December 2023 | Megacap stock have delivered nearly all of the performance in US equity markets in 2023, and we believe the performance of these stocks relative to the rest of the equity markets is unsustainable. Apart from the megacap stocks, US valuations appear reasonable, with the S&P 500 Equal Weight Index is trading at a 16x P/E ratio, in line with historical averages. As we enter 2024, we think investors will be best-served by diversifying away from megacap stocks into value stocks and reasonably priced growth stocks.

01 |  Historically, periods with significant increases in concentration have been followed by sharp reversals.

02 | Apart from the megacap stocks, US valuations appear reasonable, with the S&P 500 Equal Weight Index is trading at a 16x P/E ratio, in line with historical averages.

03 | We believe investors could be rewarded for underweighting megacap stocks and overweighting average stocks, including value and reasonably priced growth stocks.

US equity market concentration

Important Information

Unless otherwise stated, all information contained in this document is from Amundi Asset Management as of November 30, 2023. Diversification does not guarantee a profit or protect against a loss. The views expressed regarding market and economic trends are those of the [author] and not necessarily Amundi Asset Management and are subject to change at any time based on market and other conditions, and there can be no assurance that countries, markets or sectors will perform as expected. These views should not be relied upon as investment advice, a security recommendation, or as an indication of trading for any Amundi product or service. This material does not constitute an offer or solicitation to buy or sell any security, fund units or services. Investment involves risks, including market, political, liquidity and currency risks. Past performance is not indicative of future results. Amundi US is the US business of Amundi Asset Management.

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