Tag Archives: S&P 500 Equal Weight
When the Winds Change
“Change is the investor’s only certainty.” Thomas Rowe Price, Jr. 2022 marked several major changes in market trends amid a substantial shift in global macroeconomic regimes. After historic levels of stimulus, multi-decade highs in inflation across several major economies led to monetary tightening. This shift weighed on asset classes in many regions, and traditional routes…
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Celebrating 20 Years of the S&P 500 Equal Weight Index
The S&P 500® Equal Weight Index launched on Jan. 8, 2003, so Sunday marked 20 years since the index first allowed investors to measure the performance of egalitarian allocations among S&P 500 constituents. The index is now tracked by various investment products globally, and it has potential benchmarking applications. Exhibit 1 shows that the S&P…
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How Low Volatility Works in Challenging Markets
When does low volatility tend to outperform and why? S&P DJI’s Craig Lazzara and Invesco’s Nick Kalivas take a closer look at low vol performance in periods of rising rates and inflation, and explore what happens to risk/return when low vol is combined with other factors.
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Examining Equal Weight
In this tumultuous market characterized by Fed rate hikes, elevated inflation and a strong dollar, mega-cap growth companies have suffered heavy losses, paced by recent “Big Tech” earnings disappointments from Meta, Microsoft, Alphabet, Amazon and others. The S&P 500® Top 50 declined by 19% over the past 12 months, underperforming the S&P 500 by 5%….
- Categories Equities
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- Equities
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Watch Your Weighting Scheme
2022 has witnessed a recalibration across financial markets, as investors have digested the impact of higher interest rates amid elevated inflation. Despite bouts of optimism that the U.S. Federal Reserve would take a more dovish stance, and better-than-expected corporate earnings, Exhibit 1 shows that the vast majority of large-, mid- and small-cap indices declined through…
Tracking Trends with Indices
How can indices help investors understand what’s driving market trends amid inflation, rising rates, and volatility? S&P DJI’s Anu Ganti and Hamish Preston take a closer look at key trends and what they could mean for active management and asset allocation moving forward.
- Categories Factors
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- Factors
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A Closer Look at Indexing Equal Weight
How does indexing equal weight work in times of volatility and inflation? S&P DJI’s Craig Lazzara and Invesco’s Nick Kalivas discuss the key drivers behind equal-weight’s historical outperformance vs. the benchmark and what happens when equal weight is combined with factors and/or ESG.
Sizing Sectors
After peaks in S&P 500® concentration, the S&P 500 Equal Weight Index has tended to outperform, suggesting that there is a relationship between changes in concentration and the relative performance of equal weighting. But, does this relationship also occur at the sector level? Using the historical adjusted HHI (Herfindahl-Hirschman Index), we’ve previously established that concentration…
- Categories Equities
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- Equities
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Contemplating Concentration
After the exceptional performance of large-cap stocks in recent years, concentration concerns naturally come to mind. There are many ways to measure concentration. A simple method is to add up the weight of the top names, but the drawback with this approach is it doesn’t incorporate all the constituents in an index. The Herfindahl-Hirschman Index…
- Categories S&P 500 & DJIA
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Valuing Equal Weight
We have previously discussed the impact of Equal Weight’s rebound on its exposure to the momentum factor. We now turn our attention to its exposure to the value factor, as the recovery in smaller caps and value stocks has been an important tailwind for the strategy. The S&P 500® Equal Weight is typically biased toward…