Schroders Equity Lens July 2024: your go-to guide to global equity markets
New analysis of just how concentrated stock market performance has become.
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Summary:
Stock market leadership is very narrow: ~70% of US companies have failed to keep pace with the index in 2024. This has reached an extreme vs history (slides 5 and 6)
The equal-weighted version of the US stock market has underperformed the market-cap version by 10% this year. This has pushed the valuation of the average US stock to a sizable discount to the market (slides 7 and 8)
Outperformance from the biggest stocks has also been a feature outside of the US but not to the same extent: MSCI World ex-US equal-weighted index has underperformed MSCI World ex-US by 4% in 2024
This is not a growth rally: performance of the average growth stock has roughly matched the average value stock (slide 10)
Globally, smaller companies are cheaper vs history than large (slide 9) and value stocks are very cheap vs growth stocks (slide 32)
Corporate profit margins have risen over time, boosting profits in the process. But real revenues per employee are no higher than they were nearly 20 years ago (slide 18-20)
Chart of the month:
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