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United Asset Strategies Quarterly Insights: August 2024
Much has been made about the narrow returns of this bull market, and that continued in the 2nd quarter. The Magnificent 7, large-cap growth stocks introduced in our October 2023 letter, have led the market higher in this uncertain environment owing to their quality attributes. They now make up +30% of the S&P 500 and generate a strong 16% return in the 2nd quarter, contributing to 5% of the 4% index return. Exhibit 1 shows the more muted returns for the typical stock and total bond market. Just two of eleven sectors and 25% of constituents beat the market. If a portfolio manager prioritized diversification and did not own the Mag 7 at their market weight,
odds are that the stocks held in their place did not do as well. As such, we understand that just 29% of managers outperformed in the 2nd quarter.