Same index, different engine. The S&P 500 index is back at record highs, but the stocks driving these highs aren't the ones that caused the lows.
After falling more than 7% through March 30, the S&P 500 index rallied 11% to new all-time highs in just three weeks (as of April 21). We think this headline recovery hides an interesting story beneath the surface.
🔻 The selloff (12/31/25 → 3/30/26) was narrow. 10 stocks caused 86% of the sell off. Mega-caps were the largest detractors, with Microsoft down more than 20%.
🔺 The rebound (3/30/26 → 4/21/26) has been broader. The top 10 contributors accounted for 63% of gains. The other 490 stocks found leadership from chipmakers including Broadcom, Intel, Micron, and AMD.
We believe that a narrow leadership on the way down coupled with broader participation on the way up leads to a genuine shift in the stocks driving returns.
For portfolios concentrated in a handful of names, this is a signal to revisit diversification.
We are considering diversifying long-only equity, equity market neutral and real assets strategies. What are you considering for your diversification strategy?
Source: V-Square Quantitative Management LLC, S&P Global, Bloomberg. Return data shown for the periods 12/31/2025 through 4/21/2026.
This chart is for illustrative purposes only. Other indexes are available. It is not possible to invest directly in an index. Index returns do not reflect any management fees, transaction costs or expenses. Past performance does not guarantee future performance. The information and opinions contained herein are for informational purposes only, do not purport to be full or complete, do not constitute investment advice and may not be relied on. For more information, please see vsqm.com/disclaimer.
