As markets closed on Monday, the S&P 500 ETF (SPY) was up 9.8% for the year.
That’s a great return six months into the year.
Surprisingly, it is no longer concentration at the top that drives returns:
S&P 493 is outperforming S&P 500 and Mag 7 by far. Ironically, the hyperscalers who spend so much money on AI may be benefiting the rest of the market to their detriment.
In fact, the S&P 500 is up nearly 10% this year, even though companies like Microsoft, Meta, Oracle, and other tech stocks are currently in relatively large corrections:
You may also be surprised to learn that other asset classes and stock types have outperformed the S&P 500 this year.
Here is a list of asset classes that outperformed the S&P 500 in 2026 through Monday’s close:
Small caps (IWM) +21.7%
Value stocks (VTV) +15.1%
Small cap value (AVUV) +20.9%
Emerging markets (EEM) +30.8%
REITs (VNQ) +10.3%
Middle letters (VO) +11.3%
Dividend stocks (VYM) +11.7%
This is a welcome change for a variety of investors.
For years people have been worrying concentration in the stock market and what it means to own a handful of stocks that power the market. I’ve had countless conversations with investors wondering why they shouldn’t put all their money into the S&P 500.
Frankly, the S&P 500 is not having a bad year. It increased by almost 10% in the middle of the year!
But other asset classes are finally paying off.
Emerging markets have outperformed the S&P 500 over the past three years:
Small cap crushes S&P since Covid crash:
Small-cap stocks are on fire from Independence Day lows:
