Our View

Stock market concentration is back near its highest levels since the 1970s. Apple, Nvidia, and Microsoft each have a hefty 7% weighting in the S&P 500 Index,¹ and the top five stocks account for a whopping 28% of the Index.

When a handful of mega-cap stocks are delivering strong earnings and stock performance, should we really be concerned about concentration risk? We believe the answer is yes, because the current level of performance may be unsustainable. It may take some time, but we think performance will become more broadly distributed and benefit more diversified portfolios.

¹ S&P 500 Index is a market capitalization-weighted price index composed of 500 widely held common stocks.

Important Risks: Investing involves risk, including the possible loss of principal. • Diversification does not ensure a profit or protect against a loss in a declining market.

All information provided is for informational and educational purposes only and is not intended to provide investment, tax, accounting, or legal advice. As with all matters of an investment, tax, or legal nature, you and your clients should consult with a qualified tax or legal professional regarding your or your client’s specific legal or tax situation, as applicable. The preceding is not intended to be a recommendation or advice.

The views expressed here are those of the authors and should not be construed as investment advice. They are based on available information and are subject to change without notice. Portfolio positioning is at the discretion of the individual portfolio management teams; individual portfolio management teams, and different fund sub-advisers, may hold different views and may make different investment decisions for different clients or portfolios. This material and/or its contents are current as of 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 Hartford Funds.