Posted 2/12/2024, 5:05:00 PM
New Zealand Stock Market's Top-Heaviness Heightens Risks, Drags Returns
- The New Zealand stock market is extremely top-heavy, with the top 5 companies representing over 60% of the market
- This contrasts with the S&P 500, where the top 5 companies represent only about 25% of the index
- Top-heavy markets can produce impressive returns, but also heighten risks
- New Zealand's market has lagged more diversified indexes in recent years
- Investors should understand if an index is market-cap weighted or equal-weighted, as this greatly impacts risk