Investment insights from Capital Group
Outsized impact of the “Magnificent Seven” stocks to returns
Source: FactSet. Weighted values for Apple, Microsoft, Alphabet, Amazon, NVIDIA, Tesla and Meta as of 30 June, 2023. Contribution to return calculated from 2 January, 2023, to 30 June, 2023.
Many risk factors overlap and contribute to total risk
Source: MSCI BarraOne. Risk decomposition based on the MSCI Multi-Asset Class Long (MAC.L) Factor risk Model Tier 3 as of 30/6/2023, accessed on 14/7/2023; S&P 500 Index holdings as of 30/6/2023. Risk decomposition is the breakdown of various factors to analyze sources of risk in a portfolio or index. This exhibit reflects the sector risk from the information technology sector, risk from volatility measures and specific risk attributed to a hazard applicable to a particular company.
Effective number of constituents in the S&P 500 Index
Source: FactSet as of 30 June, 2023.
Narrow markets reduce diversification potential
Source: Factset as of 30 June, 2023. Stocks-bond correlation as represented by the S&P 500 Index and the Bloomberg U.S. Aggregate Index, respectively. There are 38 values of ”bad breadth” or high concentration, denoted by having less than 84 effective number of securities. The remaining 101 values or ”good breadth” are scattered in a low concentration as denoted with greater than 84 effective number of securities.
Average S&P 500 Index returns following significant declines in market breadth
Sources: Capital Group, Refinitiv Datastream, Standard & Poor's. As of 5 July, 2023. Significant declines in market breadth are measured as dates upon which the ratio of the equal-weighted S&P 500 Index to the market-cap weighted S&P 500 Index falls below the first quintile of the total range between 31 December, 2004, and 5 July, 2023.
Market Volatility
European Equity
U.S. Equities
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Past results are not predictive of results in future periods. It is not possible to invest directly in an index, which is unmanaged. The value of investments and income from them can go down as well as up and you may lose some or all of your initial investment. This information is not intended to provide investment, tax or other advice, or to be a solicitation to buy or sell any securities.
Statements attributed to an individual represent the opinions of that individual as of the date published and do not necessarily reflect the opinions of Capital Group or its affiliates. All information is as at the date indicated unless otherwise stated. Some information may have been obtained from third parties, and as such the reliability of that information is not guaranteed.
Capital Group manages equity assets through three investment groups. These groups make investment and proxy voting decisions independently. Fixed income investment professionals provide fixed income research and investment management across the Capital organization; however, for securities with equity characteristics, they act solely on behalf of one of the three equity investment groups.