Overview
- The Shiller CAPE remains well above its 155-year average of 17.35, reinforcing warnings that U.S. equities are richly priced.
- Royal Bank of Canada highlights mounting index concentration, noting the S&P 500’s top 10 companies now account for about 40.7% of the index and skew heavily to tech and AI.
- Dividend-focused strategies are in focus, with Schwab U.S. Dividend Equity ETF yielding about 3.3%, maintaining payouts through COVID and 2022, and rising more than 12% in 2026 on strength from Lockheed Martin, ConocoPhillips, and Chevron.
- Valuation-aware growth is gaining traction, as iShares MSCI USA Quality GARP posts a 32% 12‑month return versus roughly 21.5% for the S&P 500 and Russell 1000.
- Diversification choices are under review, with analysts contrasting small-cap index designs—such as roughly 40% unprofitable Russell 2000 components—and pointing to Vanguard’s VXUS for broad non‑U.S. exposure.