When evaluating what the recent performance has been in the stock markets, it’s important for us to decompose what that actually means. This chart here is at the NASDAQ 100, which is a US-based stock index comprising of a hundred different companies primarily in the technology space. And as you can see in this chart, the top seven names in the index make up just over 50% of the weight of the total index. And when you think about these names specifically on Microsoft, apple Alphabet, Amazon, Nvidia, meta, Tesla, a lot of those names have had really great investment performance this year. And because of the weights that they hold in the indexes or the indices, excuse me, those have a material impact on the returns that you’re seeing in the marketplace. In this case, the NASDAQ 100 as of June 30th, returned just north of 40%. However, if you were to equally weight every company that’s held in the index incorporating all of these other really great names, the equal weighted index was up just north of 21.5%.
That’s a difference of almost 18.5% return. Same goes for the s and p 500, while Microsoft and Apple aren’t 12 or 13%, they’re more along the lines of like a six to 7%. The s and p 500 still returned just about 17.5%. But if you were to broaden that out over all 500 companies that are owned in the s and p 500, the return was about 7%. And still that’s a 10% difference. So when we’re thinking about constructing our portfolios, we wanna be mindful of the weights that these companies are holding in the marketplace. But, um, our firm and other investment managers are not likely to own an Apple or Microsoft at a 12 or 13% weight. It’s more along the lines of like a three to four or maybe 5% weight, because we want to be maintaining a very well broadly diversified investment portfolio globally across all market caps.