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US Equities with an Equal Weight Tilt

Across
Harnessing Momentum: Despite high valuations, it's still worth considering an allocation to US Equities to harness the strong momentum. An equal-weight approach allows for this while maintaining a balanced exposure
Weighty Seven: The 'magnificent seven', or the largest companies in the S&P 500, bring a significant valuation premium compared to the rest of the US Equity segment.
An equal-weight approach can help mitigate this risk. By reducing exposure to these seven giants, investors can still benefit from the strong momentum while avoiding potential overvaluation pitfalls.
Unprecedented Concentration: In 2023, the contribution of the "Magnificient 7" to S&P 500 has reached record levels.
Thriving in Bullish Context: In conclusion, while we need to navigate with caution due to high valuations, there's no denying the current bullish context. By using an equal-weight approach, investors can thrive in this environment, benefiting from the strong momentum while reducing exposure to potential overvaluation risks
Down
Acceleration in Growth and Tech There's a significant acceleration of flows into US Growth and US Tech sectors. Investors are keen on these high-growth areas, further fuelling the bullish context.
Whilst not being "intelligent" per se, an equa-weighting allocation enables investors to take advantage of the bullish trend while maintaining a more balanced portfolio.
Quantum Of inflows: We're witnessing massive inflows into US Equity ETFs. The sheer volume of these flows is testament to the current appeal of US equities to investors worldwide
Exuberant Momentum: US Equities are currently experiencing a very strong price momentum, with impressive 1-month-returns. This bullish trend is driving investor interest and confidence in the market.
Lofty Valuations: Some caution is probably sensible related to the high valuations of the largest caps in the US Equity indices like the S&P 500. These valuations, while indicative of strong performance, also signal potential overpricing.
Guard Against Overvaluation: By reducing exposure to the 'magnificent seven', investors can guard against overvaluation and potential downturns in these high-priced stocks.