• Scroll to view all countries

Please Choose Your Country

Welcome. This website is intended solely for the use of institutional investors, consultants and other professionally recognized financial intermediaries in specific countries. Intech Investment Management LLC (“Intech”), is an investment adviser registered with the United States Securities & Exchange Commission. Intech is not permitted to offer products and services in all countries. It is the responsibility of prospective investors to inform themselves of and to observe all applicable laws and regulations of any relevant jurisdictions, including the legal requirements and tax consequences within the countries of their citizenship, residence, domicile and place of business with respect to the acquisition, holding or disposal of shares or securities, and any foreign exchange restrictions that may be relevant thereto. The products and services referred to in this website are not offered to any person or entity in any jurisdiction where the advertisement, offer or sale of such products and services is restricted or prohibited by law or regulation or where we would be subject to any registration or licensing requirement not currently held by Intech or our affiliates. If Intech does not offer a website for your country, please visit www.janushenderson.com.

Australia Wholesale Client Confirmation

Not your country? Please choose your country here.

This Website is intended solely for the use of wholesale clients in Australia and their professional consultants and investment advisers and is not for general public distribution.

This material on this website is not intended for distribution to, nor should it be relied upon by, retail clients. If you are a retail or individual investor, then please leave this Website.

Intech is permitted to provide certain financial services to wholesale clients in Australia pursuant to an exemption from the need to hold an Australian financial services licence under the Australian Corporations Act 2001. Intech is regulated by the Securities Exchange Commission of the U.S. under U.S. laws, which differ from Australian laws.

The words ‘Intech,’ ‘we,’ ‘us’ or ‘our’ used herein refer to Intech Investment Management LLC (“Intech”), an investment adviser registered with the United States Securities & Exchange Commission, and ‘you’ or ‘yourself’ may refer to an individual, Independent Financial Advisor, consultant, company, or other entity visiting this website. This website is issued by Intech Investment Management LLC (“Intech”).

Unless stated otherwise, information on this web site is provided by the issuer of the applicable financial product.

Information contained on this Website is published solely for general informative purposes and should not be relied upon as financial product advice. This content has been prepared without taking into account the objectives, financial situation or needs of any person. Before making an investment decision you should consider the appropriateness of the information on this website having regard to these matters and where relevant read any disclosure document relating to a financial product. You should also consider obtaining independent advice before making any investment decisions.

This website is intended only for wholesale clients (as defined by section 761G of the Corporations Act 2001) in Australia and their professional consultants and investment advisers who are who are knowledgeable and experienced in the financial services market and in investment products of this nature.

Should you proceed to access this Website, you will be representing and warranting that you are a “wholesale client” as defined by section 761G of the Corporations Act 2001. The information is not authorized for use in a jurisdiction where distribution is not authorized and is not intended for distribution to retail clients.

In continuing to access or use Intech’s Website at intechinvestments.com (“Website”), you agree to be bound by the Terms of Use applicable to your use of this Website and any information obtained from it. If you do not agree to these Terms of Use, please do not use this Website or download or read content from it.

The information contained on this web site is believed to be accurate and current at the time of compilation and is provided in good faith. Intech does not accept any responsibility arising in any way (including negligence) for errors in or omissions from information contained on this web site or for any loss or damage (whether direct, indirect or otherwise) suffered by the recipient of the information contained on this web site, or any other person. Intech does not accept any legal responsibility for material published on third party linked sites.

What follows is not an offer or invitation to acquire an investment to, and should therefore not be relied upon by, any person anywhere other than Australia or any person in any jurisdiction where such an offer or invitation would be unlawful. Persons in respect of whom such prohibitions apply must not access this Website.

If you choose to access this Website from locations outside of Australia, you do so at your own initiative and risk, and are responsible for compliance with all applicable laws. Otherwise, please return to intechinvestments.com and choose the appropriate jurisdiction, where you will find investment products and services that are available to you.

This Website is reserved exclusively for non-U.S. persons and should not be accessed by any person in the United States. A “U.S. Person” is defined by U.S. laws and regulations in force from time to time. If you are resident in the U.S., or as a corporation or other entity are organised under U.S. law or administered by or operated for the benefit of a legal or natural U.S. person, you should take professional advice to determine whether you are a U.S. Person and you should not access this Website until you are sure that you are not a “U.S. Person”.

WE BELIEVE THAT THE INFORMATION THAT MAY BE VIEWED ON THIS WEBSITE IS ACCURATE AS AT THE DATE OF PUBLICATION, BUT WE DO NOT GUARANTEE THE ACCURACY OR CURRENTNESS OF THE DATA AND WE DISCLAIM ALL REPRESENTATIONS AND WARRANTIES OF ANY KIND, WHETHER EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION, WARRANTIES OF MERCHANTABILITY, FITNESS FOR PARTICULAR PURPOSES, TITLE AND NON-INFRINGEMENT. FURTHERMORE, THE INFORMATION MAY BE AMENDED BY US AT ANY TIME WITHOUT NOTICE. BY PROCEEDING YOU AGREE TO THE EXCLUSION BY US, SO FAR AS THIS IS PERMITTED UNDER APPLICABLE LAW, OF ANY LIABILITY FOR ANY DIRECT, INDIRECT, PUNITVE, CONSEQUENTIAL, INCIDENTAL, SPECIAL OR OTHER DAMAGES, INCLUDING WITHOUT LIMITATION, LOSS OF PROFITS, REVENUE OR DATA ARISING OUT OF OR RELATING TO YOUR USE OF AND OUR PROVISION OF THIS WEBSITE AND CONTENT REGARDLESS OF THE FORM OF ACTION, WHETHER BASED ON CONTRACT, TORT (NEGLIGENCE), WARRANTY, STATUTE OR OTHERWISE, AND REGARDLESS OF WHETHER WE HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. IF YOU ARE DISSATISFIED WITH ANY PORTION OF THIS WEBSITE, OR OF THIS IMPORTANT INFORMATION, YOUR SOLE AND EXCLUSIVE REMEDY IS TO DISCONTINUE USE OF THIS WEBSITE.

If you are unsure about the meaning of any information provided on this Website, then please consult your financial or other professional adviser. We do not offer investment advice.

Cookies: This Website uses cookies to remember your preferences and to help us to improve this Website through the use of web analytics. By continuing without changing your cookie settings we will assume that you are happy to receive cookies for these two purposes. For full details on how to manage our cookies and how we use them, please see our Cookie Policy as well as the Cookies section within our Privacy Policy.


Decline - I am not a wholesale client

U.S. large-cap markets delivered another impressive year of returns in 2021. And once again the vast bulk of gains were driven by a handful of mega-cap stocks.

The largest of the large caps—companies such as Apple, Amazon and Tesla—continued to wildly outperform the broader Russell 1000 Index, expanding on the mega-cap momentum cycle that has surged since 2018. Indeed, take out its top five mega-cap names and the index’s 2021 total return falls 6.53%, from 26.46% to 19.93%.1

Fig_1 Big Names Big Returns

This run-up has resulted in more than just spectacular returns for investors. It also has pushed market capitalizations for these companies to unprecedented levels, dramatic in both magnitude and pace, with no signs of slowing down. Consider, for example, that Apple took nearly 40 years to become the first publicly traded company to reach a market capitalization of US$1 trillion in 2018 and then only three more to almost triple its value to US$2.94 trillion by the end of 2021. Four other companies have also surpassed the US$1 trillion threshold.

This type of remarkable price expansion in just a few stocks has pushed market capital concentrations to historically high—and potentially troubling—levels.

As of December 31, 2021, the 10-largest stocks in the S&P 500 make up 29% of the index, with the two largest, Apple and Microsoft, weighing over 6% each. This has never occurred in 30 years of data! The combined weight of Apple and Microsoft is larger than that of all stocks in the utilities, real estate, materials, and energy sectors.

The figure below shows the market weight of the 10 largest stocks within their respective market indexes. It illustrates that market capital concentration is at extremely high levels in the U.S. and global markets based on their relative index history. Conversely, we observe that non-U.S. developed equity market concentration is on the lower end of the spectrum.

Fig_2 Growing Bigger Faster

A deeper look shows that capital concentration has been led by the seven largest U.S. growth companies (eight stocks given Alphabet Class A and C); Apple, Microsoft, Amazon.com, Alphabet, Tesla, Meta Platforms, and Nvidia now have a combined weight of 27% in the S&P 500 Index. As little as three years ago, Nvidia wasn’t even the largest or second-largest stock in the semiconductor industry, but is now one of the largest companies overall in the index.

The weight of the consumer discretionary sector within the S&P 500 briefly surpassed the healthcare sector for the first time in almost 20 years, due primarily to Amazon.com and Tesla. The information technology sector is now 29% of the index, more than half of which is just three stocks (Apple, Microsoft, and Nvidia). The three largest communication services stocks, Alphabet Class A and C and Meta Platforms, represent roughly 60% of the sector, whereas the three largest industrials stocks represent just 15% of the industrials sector. The list of these kinds of concentration shifts goes on and on.

Fig_3 The Highest Market Capital Concentration

The net result is that the S&P 500 and most other popular capitalization-weighted U.S. large-cap indices are now much less diversified than they were just a few years ago, in terms of both individual stock weights and performance drivers. This is evidenced by the large outperformance in capitalization-weighted returns versus equal-weighted returns. Over the past five years, the capitalization-weighted returns for the S&P 500 and Russell 1000 indices have outperformed their equal-weighted returns by more than 25.8% and 41.1%, respectively. Compare this to the 20-year longer-term averages where the equal-weighted indices both consistently and significantly outperformed.2

Fig_4 - Capitalization-Weighted Returns

Find Out More

The current top-heavy nature of the U.S. large-cap market should give investors pause. Most capitalization-weighted U.S. large-cap indices now appear highly concentrated at both stock and sector levels, which has meaningfully diminished the diversification characteristics of these benchmarks and the passive strategies that seek to mirror them. To find out how this trend has pushed a key economic indicator to concerning levels, download the full paper.

Rethink Your Large-Cap Allocations Why indexes are less diversified than you think Download Paper

 

1 This calculation does not reweight the index to 100% without the five top-performing mega-cap stocks. Removing these five stocks and reweighting the index results in a 2021 total return decline of 2.20%, from 26.46% to 24.26%.

2 All weights and figures as of December 31, 2021.

The information expressed herein is subject to change based on market and other conditions. The views presented are for general informational purposes only and do not purport to address the financial objectives or specific investment needs of any individual reader, investor, or organization. This information should not be used as the sole basis for investment decisions. All content is presented by the date(s) published or indicated only, and may be superseded by subsequent market events or other reasons.

Past performance is no guarantee of future results. Investing involves risk, including possible loss of principal and fluctuation of value. Information that is based on past results or observations is not necessarily a guide to future results, and no representation or warranty, express or implied, is made regarding future results.

Index returns do not reflect transaction costs or the deduction of fees. It is not possible to invest directly in an index. 

References made to individual securities should not constitute or form part of any offer or solicitation to issue, sell, subscribe or purchase the security.

MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein, if shown. The MSCI data may not be further redistributed or used as a basis for other indices or any securities or financial products. This material has not been approved, reviewed, or produced by MSCI.

S&P 500 Dow Jones Indices LLC and/or its affiliates make no express or implied warranties or representations and shall have no liability whatsoever with respect to any S&P data contained herein. The S&P data has been licensed for use by Intech and may not be further redistributed or used as a basis for other indices or any securities or financial products. This material has not been approved, reviewed, or produced by S&P Dow Jones Indices LLC. For more information on any of S&P Dow Jones Indices LLC's indices, please visit www.spdji.com.

This material has been developed solely by Intech and are not in any way connected to or sponsored, endorsed, sold or promoted by the London Stock Exchange Group plc and its group undertakings (collectively, the “LSE Group©”). FTSE® and Russell® are trademarks of the relevant LSE Group© companies and are used by any other LSE Group© company under license. All rights in the FTSE/Russell indexes or data vest in the relevant LSE Group© company, which owns the index or the data. Neither LSE Group© nor its licensors accept any liability for any errors or omissions in the indexes or data and no party may rely on any indexes or data contained in these materials. No further distribution of data from the LSE Group© is permitted without the relevant LSE Group© company’s express written consent. The LSE Group© does not promote, sponsor, or endorse the content herein.

Related Posts

Top Blog Posts - 2022 Year in Review

Low Volatility? Exactly What Kind of Volatility Are We Talking About?

Finding Limits to Asset Class Diversification? Take Another Look at Your Equities.

2025 Intech ©. All rights reserved.

Privacy Policy | California Privacy Notice | Terms of Use | Cookie Policy