Q2 2024 / Strategy Update

Stocks powered higher in the first half of the year, with the S&P 500 rising +15% and reaching 32 new all-time highs. But a rising tide did not lift all boats. 

Notably, just five companies—Nvidia, Apple, Google, Amazon, and Meta—contributed 62% of the index’s total return in the first half of the year. Consistent with our key theme of being long innovations in cloud and Artificial Intelligence, we currently own four of these companies and have held shares in all five in 2024 (we sold Google in April). 

Small-cap stocks, mid-caps, value stocks, and more than half of S&P 500 sectors declined in the second quarter. For active managers who remain reluctant to overweight Technology and Communications Services—or for those who benchmark too closely to the S&P 500—the past 20 months has likely featured significant underperformance. WestEnd has been firmly overweight Technology for virtually this entire period. 

Our conviction with regards to cloud and AI is not grounded in “hope” that the AI boom pans out. We’ve been long because of the magnitude of earnings growth being generated by tech giants relative to the rest of the S&P 500.