A lot has been said and written about the dominance of the US sharemarket by the “Magnificent Seven” mega technology stocks that have driven the market to record levels. Should a reliance on such a narrow slice of the market be a concern for investors?The New York FANG index, which largely reflects their performance, has surged almost 85 per cent over the past year and is up nearly 13 per cent so far this year.
That’s a massive outperformance of the S&P 500, which has risen 36 per cent over the past year and is up 8.3 per cent year-to-date. The contrast between the mega techs and the rest is even more stark if their performance is measured against the equal-weight S&P 500, which is “only” 18 per cent higher than a year ago and up 5 per cent so far this year. The over-reliance on a handful of stocks could be seen as a vulnerability, particularly given the nature of tech stocks and the relatively high-interest-rate environmen