Financial Stocks Lagging as S&P 500 Valuations Reach Record High

The S&P 500 Index Fund has a significant allocation to financial stocks such as Berkshire Hathaway, JPMorgan Chase, and Visa.

Despite this, the financial sector has been underperforming over the past year, with these large-cap stocks flat year-to-date on a cumulative basis and up just 1% over the last 12 months.

Investors may want to consider broadening their portfolios beyond large-caps and financials due to the high valuation of the S&P 500, which is near an all-time high at 41.59 according to the Shiller P/E ratio.

Value stocks are projected to be the best-performing asset class over the next 10 years with an average annualized return of 6.4% to 8.4%, followed by small-caps and international ex-US stocks.