Apple became the world’s first $3 trillion dollar company late last week, although it could slip back below today after reports suggest production targets for its new VR headset may fall short. The tech giant first hit a market cap of $1 trillion in 2018, and $2 trillion in 2020. The 45% increase seen in the stock this year has been a major contributor to what is now the NASDAQ’s best first half of the year since 1983. From our perspective, narrow market leadership can be a cause for concern. However, when profits are concentrated to a smaller number of companies, we should expect that to be reflected in share prices.
At Zurich, within our multi-asset funds, our preference for equities over eurozone sovereign bonds this year has aided performance. We maintain that preference as we enter the second half of the year. Bonds are a live option now, and we have reflected increased yields in our duration position. However, given inflation (more details below) remains stubbornly high, the ECB is likely to maintain a hawkish stance. Coupling this outlook with the view that if a recession materialises it is unlikely to be neither severe nor prolonged, equities continue to be our preference from a relative valuation perspective. We will build on these ideas, along with further views, in our half year investment outlook which is due to be published next week.
As always, if you wish to discuss anything in further detail, please do get in touch.