Good morning,
The latest US figures last week show that the disinflation trend remains intact, a deeper dive into the figures is contained below. However, there is always the shadow of respective risks looming over investment markets. Two key topics currently are market breadth and the US debt ceiling. We’ll no doubt have the opportunity to discuss the second point as negotiations ramp up as we approach the limit, forecast to potentially be in the next month.
In relation to market breadth, we have discussed this at numerous junctures in recent years. The headline stats are certainly material and not without concern:
- In the US, the top ten stocks are responsible for 70% of returns so far this year
- Apple now has a bigger market cap than the whole Russell 2000 index
- Apple and Microsoft alone are now almost 15% of the S&P 500.
However, it is worth noting that concentration has always existed. We have been applying our active top-down investment process to multi-asset funds since the 1980s. We have witnessed the trends and narratives of peak oil, the rise of Japan, the dot com bubble, and the emergence of China. Capitalising on these trends through strategic allocations, whilst allowing for tactical flexibility are core tenets to our approach at Zurich. Further information on our philosophy, process, and people is available here.
As always, if you wish to discuss anything in further detail, please do get in touch.
