Tuesday, April 18, 2017

18/4/17: S&P500 Concentration Risk Impact


Recently I posted on FactSet data relating earnings within S&P500 across U.S. vs global markets, commenting on the inherent risk of low degree sales/revenues base diversification present across a range of S&P500 companies and industries. The original post is provided here.

Now, FactSet have provided another illustration of the 'concentration risk' within the S&P500 by mapping earnings and revenues growth across two sets of S&P500 companies: those with more than 50% of earnings coming from outside the U.S. and those with less than 50% of earnings coming from the global markets.


The chart is pretty striking. More globally diversified S&P constituents (green bars) are posting vastly faster rates of growth in earnings and a notably faster growth in revenues than S&P500 constituents with less than 50% share of revenues from outside the U.S (light blue bars).

Impact of the concentration risk illustrated. Now, can we have an ETF for that?..

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