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Two seemingly contradictory statements can both be true:

  • The US was one of the worst-performing stock markets
  • The best-performing stocks in the world were mostly US companies

On the first, after years of being top dog, the US equity market (as represented by the MSCI USA Index1) lost 19% for investors last year. The loss put the US in 17th position out of the 23 countries in the MSCI World Index2 of developed-market stocks.

But this was driven by a handful of tech behemoths, which dragged the market down. A portfolio of the seven-largest US companies from a year ago would have lost investors 40% in 2022 (FIGURE 1). A portfolio of the rest would have lost only 14%.


The Biggest 7 Companies Accounted for Most of the US Market's Poor Performance

Past performance does not guarantee future results. | As of 12/31/22. Based on constituents of the MSCI USA Index. Indices are unmanaged and not available for direct investment. Sources: Refinitiv Datastream and Schroders. 


US Equities Didn't Do Half as Bad Outside of the Biggest 7 Companies

Past performance does not guarantee future results. As of 12/31/22. Large-7 portfolio is the portfolio of the seven-largest companies by free-float market capitalization. These are Apple, Microsoft, Alphabet (Google), Amazon, Tesla, Meta (Facebook), Nvidia. Based on constituents of the MSCI USA Index. Sources: Refinitiv Datastream and Schroders.


A small number of companies have been in the driver's seat in terms of market performance. That risk came home to roost last year.


The US market has become increasingly concentrated in recent years, a risk we've been highlighting for some time. A small number of companies have been in the driver's seat in terms of market performance. That risk came home to roost last year.

It's within those remaining companies that many of the best-performing stocks globally could be found in 2022. Eight of the top-10 performers were US companies. Sixteen of the top 25 also were US-based, as were 53 of the top 100. US companies made up about 41% of the MSCI World Index at the start of the year, so they've punched above their weight in delivering good performance.

Most of these very good performers are in the energy sector, including all eight in the top 10. With a 119% return, Occidental Petroleum is top of the pile, followed by Hess, Exxon Mobil, Marathon Petroleum, and Schlumberger (the oilfield services company). Further down the top 25 are steel producer Steel Dynamics and three US healthcare companies.



US Companies Dominated the Global Top Performers in 2022

Position Company Country of Listing Sector 2022 Total Return ($)
1 Occidental Petroleum US Energy 119%
2 Hess US Energy 94%
3 Exxon Mobil US Energy 87%
4 Marathon Petroleum US Energy 87%
5 Schlumberger US Energy 81%
6 Mitsubishi Heavy Industries Japan Industrials 76%
7 Tourmaline Oil Canada Energy 76%
8 Valero Energy US Energy 75%
9 Halliburton US Energy 75%
10 Conocophillips US Energy 71%
11 Tenaris Italy Energy 71%
12 Swire Pacific 'A' Hong Kong Real estate 63%
13 Cenovus Canada Energy 61%
14 Woodside Energy Group Australia Energy 61%
15 Steel Dynamics US Materials 60%
16 Dassault Aviation France Industrials 59%
17 Chevron US Energy 58%
18 Eog Resources US Energy 57%
19 Cardinal Health US Healthcare 54%
20 Thales France Industrials 53%
21 McKesson US Healthcare 52%
22 Devon Energy US Energy 51%
23 Keppel Singapore Industrials 50%
24 Phillips 66 US Energy 50%
25 Merck & Company US Healthcare 49%

Past performance does not guarantee future results. Data as of 12/31/22. Based on constituents of the MSCI World Index. Sources: Refinitiv Datastream and Schroders.


The strong performance of energy companies shouldn't be a surprise given the rise in oil prices in response to the war in Ukraine. If we were to repeat this same analysis in a year’s time, the top performers could almost certainly be different.

But what may continue to be the case is that high levels of concentration in the US stock market (as well as in other ex-US markets) means only a handful of stocks will exert an outsized influence on the returns investors earn.

In previous years, this was a benefit to US stock-market investors. Over the 2020-2021 period, US equity returns would have been around 20% lower without these seven companies (34% vs. 54%). But last year it was to their detriment.

It's very important for investors to understand the concentrated exposures they're taking on, often unwittingly, when allocating to broad market indices. This could be in terms of stock, sector, style, or region. Achieving balance and diversification is, sadly, not as simple as investing in a portfolio of global stocks.


Your financial professional can help you develop strategies for maintaining a well-balanced, diversified portfolio. 


1 MSCI USA Index is a free float-adjusted market capitalization-weighted index that is designed to measure the performance of the large- and mid-cap segments of the US market.

2 MSCI World Index is a free float-adjusted market capitalization-weighted index that is designed to measure the equity market performance of developed markets.

Important Risks: Investing involves risk, including the possible loss of principal. • Investments in the commodities market and the natural-resource industry may increase liquidity risk, volatility, and risk of loss if adverse developments occur. • There are risks of focusing investments in securities of companies in the utilities and industrials sectors which may cause the performance to be sensitive to developments in those sectors. • Risks of focusing investments on the healthcare-related sector include regulatory and legal developments, patent considerations, intense competitive pressures, rapid technological changes, potential product obsolescence, and liquidity risk. • Diversification does not ensure a profit or protect against a loss in a declining market.

Neither MSCI nor any other party involved in or related to compiling, computing or creating the MSCI data makes any express or implied warranties or representations with respect to such data (or the results to be obtained by the use thereof), and all such parties hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability or fitness for a particular purpose with respect to any of such data. Without limiting any of the foregoing, in no event shall MSCI, any of its affiliates or any third party involved in or related to compiling, computing or creating the data have any liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if notified of the possibility of such damages. No further distribution or dissemination of the MSCI data is permitted without MSCI’s express written consent.

The views expressed herein are those of Schroders Investment Management (Schroders), are for informational purposes only, and are subject to change based on prevailing market, economic, and other conditions. The views expressed may not reflect the opinions of Hartford Funds or any other sub-adviser to our funds. The opinions stated in this document include some forecasted views. Schroders believes that they are basing their expectations and beliefs on reasonable assumptions within the bounds of what they currently know. The views and information discussed should not be construed as research, a recommendation, or investment advice, nor should they be considered an offer or solicitation to buy or sell any security. This information is current at the time of writing and may not be reproduced or distributed in whole or in part, for any purpose, without the express written consent of Schroders or Hartford Funds.

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Insight from sub-adviser Schroders Investment Management
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Head of Strategic Research



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