Yet, S&P 500 Growth's gain relative to that of S&P 500 Value has been much weaker at 4%. As shown below, the Russell 1000 Growth Index has outpaced the Russell 1000 Value Index by a solid margin this year (nearly 15%). That simply isn't the case across all indexes, though. One might look at the aforementioned outperformance of large-cap 'growth' sectors like Tech and Communication Services, and expect growth-labeled indexes to reflect similar strength. Yet, the underperformance in late 2021 preceded a much different set of circumstances in 2022, a full-blown bear market that dealt a large hit to the large-cap behemoths.Īnother area in which leadership dynamics have become difficult to parse through is the growth and value universe. As we all remember, 2021 wasn't a bad level for the market in general. The reversal from late 2020 into early 2021 didn't precede anything sinister for the market, as the 'average' stock was reclaiming its pandemic losses, courtesy of the broad reopening of the economy. Prior instances of underperformance for the equal weight index-mid-to-late 2020 and late 2021-preceded reversals in the ratio, but it's worth noting certain differences.

As shown in the chart below, the equal weighted version of the S&P 500 Information Technology sector has fallen to its lowest price relative to the cap weighted version in several years-undercutting the September 2020 low (which was the peak in relative performance for the 'big 5' relative to the rest of the S&P 500).

Homing in specifically on the ever-popular Tech sector, it represents the posterchild for the buildup in concentration risk this year.

Up Front by Bill Mauldin