Scientific Beta

Investment News New Zealand: "And investors similarly deserve a more real-world risk indicator than the traditional market capitalisation-weighted indices, according to a recent Scientific Beta paper. The study, authored by Scientific Beta index director, Daniel Aguet, notes, for example, that the standard US S&P 500 cap-weighted (CW) benchmark has always overstated the ‘effective’ market diversification."

Investment News New Zealand 19/11/2023

"(...) And investors similarly deserve a more real-world risk indicator than the traditional market capitalisation-weighted indices, according to a recent Scientific Beta paper. The study, authored by Scientific Beta index director, Daniel Aguet, notes, for example, that the standard US S&P 500 cap-weighted (CW) benchmark has always overstated the ‘effective’ market diversification. Based on the relative exposure to each company from 1970 to this June, Aguet estimates S&P 500 index investors held the equivalent of “an equally-weighted portfolio of just 114 of the largest stocks of the US universe” – or 22.8 per cent of the total. (...) Mike Aked, senior investment specialist for Scientific Beta in Australia, said the current concentration of US market returns in a handful of large companies might be an historical outlier but it is not unique. “All such episodes in the past have mean-reverted,” Aked said. (...)"