Financial Stocks Lag Behind, But Value Stocks May Still Deliver

The S&P 500 index fund already owns top financial stocks like Berkshire Hathaway, JPMorgan Chase, and Visa. However, these stocks have underperformed over the past year, making it an opportune time to diversify beyond large-caps and financials.

Financial stocks have been lagging behind other sectors, with a cumulative return of just 1% over the past 12 months. Despite this, investors may still want to own some of these top financial stocks, particularly those with strong fundamentals and growth potential.

Vanguard predicts that value stocks will be the best-performing asset class over the next 10 years, with an average annualized return of 6.4% to 8.4%. Small-caps are expected to return 4.7% to 6.7%, while international ex-US stocks are targeted for a 4.5% to 6.5% annualized 10-year return.

Investors should consider broadening their portfolios to include small-cap and mid-cap stocks, as well as value stocks and international investments. This will help to reduce reliance on overvalued large-caps and provide a more diversified portfolio that can withstand market fluctuations.