Written by Douglas Newsome

2020 H1 Hindsight and Returns Dispersion

For the markets as a whole and the S&P 500 in particular, the first half was a period of wide dispersion and the continuing tale of growth stocks outperforming value stocks. 70% of the component stocks were negative while only 150 of the S&P 500 stocks were positive year-to-date, including dividends. Thus, the average S&P 500 stock performed worse than the index.

  • If you bought the top 100 performing stocks in the S&P 500 on an equal weighted basis on Jan 1st this year and held them until June 30th, you would have been up 22.9%, and beaten the S&P 500 total return by 26.0%.
  • If you concentrated and picked the top 10 performing stocks on Jan 1st, and again held them for the 1st half, you would have generated a total return of 59.5%, 62.6% greater than the S&P for the half.
  • If instead you somehow picked the 100 worst performing stocks for the 1st half, you would have to mark your portfolio down by 42.2%.
  • If you were in the worst 10 stocks for the 1st half, you would have to mark your portfolio down 62.3%.

* The data in this table was generated from the S&P website at www.spindices.com and Refinitiv, www.refinitiv.com. The calculations from this data were performed internally. Perkins Fund Marketing LLC deems these sources to be reliable, but they are not in any way guaranteed and should not be considered as any form of an investment recommendation.

While the average hedge fund was down 1.1% in H1 according to HFM’s North American Index, the average hedge fund outperformed the S&P’s -3.08% and provided significant alpha relative to many long only equity indices.

The first half performance results among the many asset classes may reposition interest in many strategies and managers for years to come.

Best wishes to all and stay safe.

J. Douglas Newsome

Managing Director, Director of Research

Perkins Fund Marketing LLC