Michael E. Schroer, CFA MANAGING PARTNER & CHIEF INVESTMENT OFFICER | RENAISSANCE INVESTMENT MANAGEMENT Highlights Mike Schroer, CFA, Chief Investment Officer at Renaissance Investment Management, discusses the concentration in market-cap weighted indices and their impact on the current environment. One of the more significant aspects of today’s market is the concentration of a relatively small number of companies in many stock market indices. Most stock market indices are capitalization-weighted, meaning that larger-sized companies, such as Apple, have a much larger percentage weight in the index than smaller-sized companies. Here, I talk about how competitive pressures, regulatory issues, and the inability to maintain strong growth rates in revenues and earnings can lead to the most popular stocks underperforming in the long term. The U.S. stock market has been top-heavy with few large companies, primarily in Tech, driving returns for several years. Now may be an especially good time to diversify away from concentrated indices and, instead, consider high quality, reasonably priced growth opportunities. LEARN MORE ABOUT DIVERSIFICATION
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