Stocktake: Beating the market was ‘nigh-on impossible’ in 2019

If you didn’t overweight technology, you had little chance of beating the market

The large-cap US market led the world, with smaller US stocks, international equities, fixed income, and commodities all trailing in its wake. Photograph: Brendan McDermid/Reuters

The large-cap US market led the world, with smaller US stocks, international equities, fixed income, and commodities all trailing in its wake. Photograph: Brendan McDermid/Reuters

 

Few active managers are expected to beat the S&P 500 in 2019. That’s not unusual, given that S&P Dow Jones Indices’ SPIVA scorecard routinely documents that managers underperform. Still, a confluence of factors meant 2019 was especially tricky for managers, notes S&P’s Chris Bennett.

Why? One way of beating indices is by overweighting or underweighting certain stocks. However, the five biggest stocks in the index averaged gains of 51 per cent – bad news for managers, given most are uncomfortable overweighting a stock that’s already a large component of the index.

Similarly, the biggest sectors outperformed the smallest sectors; if you didn’t overweight technology, you had little chance of beating the market, given the sector gained over 50 per cent.

Commodities

Thirdly, investors who ventured outside the S&P 500 were penalised for doing so. The large-cap US market led the world, with smaller US stocks, international equities, fixed income, and commodities all trailing in its wake.

Recent data from Société Générale’s Andrew Lapthorne echoes this analysis, Lapthorne noting that just one in five of 16,000 global stocks outperformed the S&P 500 over the last two years.

Markets are always “hard to beat”, says Chris Bennett. However, 2019’s range of circumstances “made ‘hard to beat’ become nigh-on impossible for the S&P 500”.

The Irish Times Logo
Commenting on The Irish Times has changed. To comment you must now be an Irish Times subscriber.
SUBSCRIBE
GO BACK
Error Image
The account details entered are not currently associated with an Irish Times subscription. Please subscribe to sign in to comment.
Comment Sign In

Forgot password?
The Irish Times Logo
Thank you
You should receive instructions for resetting your password. When you have reset your password, you can Sign In.
The Irish Times Logo
Please choose a screen name. This name will appear beside any comments you post. Your screen name should follow the standards set out in our community standards.
Screen Name Selection

Hello

Please choose a screen name. This name will appear beside any comments you post. Your screen name should follow the standards set out in our community standards.

The Irish Times Logo
Commenting on The Irish Times has changed. To comment you must now be an Irish Times subscriber.
SUBSCRIBE
Forgot Password
Please enter your email address so we can send you a link to reset your password.

Sign In

Your Comments
We reserve the right to remove any content at any time from this Community, including without limitation if it violates the Community Standards. We ask that you report content that you in good faith believe violates the above rules by clicking the Flag link next to the offending comment or by filling out this form. New comments are only accepted for 3 days from the date of publication.