2025 has started with a significant different playbook than 2014. Last year it was all about concentration in the U.S., the Tech sector and the Mag7. If you look at the chart below, you can see how investors have broadened their views and have put money to work with a different approach: (1) the Mag7 stocks are the worst performer as a group of the selected indexes YTD. (2) The S&P500 index and the equally weighted version of it have provided similar returns, which tells you the concentrated bets seem to be on retreat. (3) Europe and EM are the best performers, closing the valuation gap with the U.S.(4) Mid caps are in a good spot, close to blue chips and the S&P500. (5) small caps are lagging, even though they still offer a compelling story valuation wise. (6) Credit is till performing relatively well, but spreads are very tight, with limited upside form here. In a nutshell, the market has been rotating without major corrections with a completely different narrative underneath. Lastly, not pictured in the chart below, gold is the best performing asset within the list below, with 11% YTD.
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