Confirm you would like to unsubscribe from this list

Don't save

Remove strategy

Confirm you would like to remove this strategy from your list

Welcome to Thornburg

Please select your location and role to help personalize the site.
Please review our Terms & Conditions


Please read the information below. By accessing this web site of Thornburg Investment Management, Inc. ("Thornburg" or "we"), you acknowledge that you understand and accept the following terms and conditions of use.


Products or services mentioned on this site are subject to legal and regulatory requirements in applicable jurisdictions and may not be licensed or available in all jurisdictions and there may be restrictions or limitations to whom this information may be made available. Unless otherwise indicated, no regulator or government authority has reviewed the information or the merits of the products and services referenced herein. Past performance is not a reliable indicator of future performance. Investments carry risks, including possible loss of principal.

Reference to a fund or security anywhere on this website is not a recommendation to buy, sell or hold that or any other security. The information is not a complete analysis of every material fact concerning any market, industry, or investment, nor is it intended to predict the performance of any investment or market.

All opinions and estimates included on this website constitute judgements of Thornburg as at the date of this website and are subject to change without notice.

All information and contents of this website are furnished "as is." Data has been obtained from sources considered reliable, but Thornburg makes no representation as to the completeness or accuracy of such information and has no obligation to provide updates or changes. Thornburg disclaims, to the fullest extent of the law, any implied or express warranty of any kind, including without limitation the implied warranties of merchantability, fitness for a particular purpose and non-infringement.

If you live in a state that does not allow disclaimers of implied warranties, our disclaimer may not apply to you.

Although Thornburg intends the information contained in this website to be accurate and reliable, errors sometimes occur. Thornburg does not warrant that the information to be free of errors, that the functions contained in the site will be uninterrupted, that defects will be corrected or that the site and servers are free from viruses or other harmful components. You agree that you are responsible for the means you use to access this website and understand that your hardware, software, the Internet, your Internet service provider, and other third parties involved in connecting you to our website may not perform as intended or desired. We also disclaim responsibility for damages third parties may cause to you through the use of this website, whether intentional or unintentional. For example, you understand that hackers could breach our security procedures, and that we will not be responsible for any related damages.

Thornburg Investment Management, Inc. is regulated by the U.S. Securities and Exchange under U.S. laws which may differ materially from laws in other jurisdictions.

Online Privacy and Cookie Policy

Please review our Online Privacy and Cookie Policy, which is hereby incorporated by reference as part of these terms and conditions.

Third Party Content

Certain website's content has been obtained from sources that Thornburg believes to be reliable as of the date presented but Thornburg cannot guarantee the accuracy, timeliness, completeness, or suitability for use of such content. The content does not take into account individual investor's circumstances, objectives or needs. The content is not intended as an offer or solicitation with respect to the purchase or sale of any security or other financial instrument or any investment management services, nor does it constitute investment advice and should not be used as the basis for any investment decision.


No determination has been made regarding the suitability of any securities, financial instruments or strategies for any investor. The website's content is provided on the basis and subject to the explanations, caveats and warnings set out in this notice and elsewhere herein. The website's content does not purport to provide any legal, tax or accounting advice. Any discussion of risk management is intended to describe Thornburg's efforts to monitor and manage risk but does not imply low risk.

Limited License and Restrictions on Use

Except as otherwise stated in these terms of use or as expressly authorized by Thornburg in writing, you may not:

  • Modify, copy, distribute, transmit, post, display, perform, reproduce, publish, broadcast, license, create derivative works from, transfer, sell, or exploit any reports, data, information, content, software, RSS and podcast feeds, products, services, or other materials (collectively, "Materials") on, generated by or obtained from this website, whether through links or otherwise;
  • Redeliver any page, text, image or Materials on this website using "framing" or other technology;
  • Engage in any conduct that could damage, disable, or overburden (i) this website, (ii) any Materials or services provided through this website, or (iii) any systems, networks, servers, or accounts related to this website, including without limitation, using devices or software that provide repeated automated access to this website, other than those made generally available by Thornburg;
  • Probe, scan, or test the vulnerability of any Materials, services, systems, networks, servers, or accounts related to this website or attempt to gain unauthorized access to Materials, services, systems, networks, servers, or accounts connected or associated with this website through hacking, password or data mining, or any other means of circumventing any access-limiting, user authentication or security device of any Materials, services, systems, networks, servers, or accounts related to this website; or
  • Modify, copy, obscure, remove or display the Thornburg name, logo, trademarks, notices or images without Thornburg's express written permission. To obtain such permission, you may e-mail us at info@thornburg.com.

Severability, Governing Law

Failure by Thornburg to enforce any provision(s) of these terms and conditions shall not be construed as a waiver of any provision or right. This website is controlled and operated by Thornburg from its offices in Santa Fe, New Mexico. The laws of the State of New Mexico govern these terms and conditions. If you take legal action relating to these terms and conditions, you agree to file such action only in state or federal court in New Mexico and you consent and submit to the personal jurisdiction of those courts for the purposes of litigating any such action.


You acknowledge and agree that Thornburg may restrict, suspend or terminate these terms and conditions or your access to, and use, of the all or any part this website, including any links to third-party sites, at any time, with or without cause, including but not limited to any breach of these terms and conditions, in Thornburg's absolute discretion and without prior notice or liability.

Give Us a Call

Fund Operations

Yellow tunnel narrows as light shines in from the end.
Global Equity

Why are so few stocks driving the market this year?

Nicholas Anderson, CFA
Portfolio Manager and Managing Director
28 Jul 2023
6 min read

International Growth Portfolio Manager Nick Anderson reminds investors that while this year’s market breadth is narrower than usual, market breadth is a myth.

A few mega-cap stocks have driven market returns so far this year. Just ten companies have produced three-quarters of the return of the MSCI United States Index through the first half of 2023. This has led investors — generally those who missed owning these leaders — to complain about narrow “market breadth.” Implicit in this view is that more stocks should be producing positive returns. But is this intuition correct? Is the market’s narrow breadth a signal of trouble to come? Should we expect the softer names to eventually catch up?

Through the First Half of 2023, 10 Stocks Comprised 75% of the Index’s Advance

MSCI United States Index: Top Contributors Year-to-Date

Stock Average weight Return YTD % of index return (cumulative)
Apple 7.0% 49.7% 17.8%
Microsoft 5.5% 42.7% 30.4%
Nvidia 1.8% 189.5% 42.3%
Amazon 2.7% 55.2% 49.8%
Meta Platforms 1.3% 138.5% 56.4%
Tesla 1.4% 112.5% 62.8%
Alphabet (A and C) 3.3% 36.3% 69.4%
Broadcom 0.7% 57.1% 71.6%
Eli Lilly & Co 0.8% 28.9% 73.1%
Advanced Micro Devices 0.4% 75.9% 74.5%

Source: MSCI The performance data quoted represents past performance; it does not guarantee future results.

We compared the concentration of returns through the first six months of 2023 with the preceding ten years. As shown in the table below, 2023 has been more extreme than normal. This year, 75% of the market’s return was produced by just ten stocks. In most years, the top 10 stocks produce about a third of the market’s return.

But this historical pattern is still highly concentrated. To have 10 stocks — out of hundreds in the index — generating a third of the index return is not a broad market. It is a narrow market. To our mind, this suggests that expecting market “breadth” is generally a misguided assumption.

Concentration at the Top is the Norm

’13 ’14 ’15 ’16 ’17 ’18 ’19 ’20 ’21 ’22 ’23 YTD ’13 -’23 YTD
Concentration at the top:
MSCI US Index Total Return (%) 32.6 13.4 1.3 11.6 21.9 -4.5 31.6 21.4 27.0 -19.5 17.1 278.7
% of index return from top 10 contributors 16.2 26.9 241.7 27.2 29.4 52.7 29.0 62.7 37.8 56.6 75.0 31.0
Breadth of returns:
% of constituents outperforming the index 50.2 48.8 45.0 47.0 40.9 44.6 42.7 33.1 43.7 55.9 30.0 17.0

Source: MSCI The performance data quoted represents past performance; it does not guarantee future results.

The table also illustrates the percent of constituents that outperform the index. In almost every year, less than half of stocks outperform the overall index. This year, the ratio is lower than normal at just 30%, another illustration of the higher-than-normal concentration. Importantly, over the entire sample period, the ratio is lower still at just 17%. That the success rate diminishes at longer horizons demonstrates the reduced chance of a stock sustaining outperformance over multiple years.

A large body of empirical work proves this point more rigorously. Academic researchers have analyzed decades of data in both the U.S. and international equity markets. Their work demonstrates that stock returns are very concentrated at long horizons. Hendrik Bessembinder, a finance professor at Arizona State University, found that just 4% of stocks produced all the net dollar wealth creation in US equity markets over the nearly century-long period from 1926 to 2019. The other 96% of stocks, in aggregate, added no value over their respective lifetimes.

Professor Bessembinder titles his article with a provocative question: “Do stocks outperform Treasury bills?” He shows that the answer is no. Four out of every seven stocks have lifetime buy-and-hold returns less than one-month Treasuries over matched timeframes. In other words, the median stock will underperform a risk-free bill over its life.

This contradicts our intuition about equities. How can the stock market deliver attractive returns, even if most stocks are duds? The answer is that market averages are driven by a small number of exceptional performers. Over time, these big winners grow into larger index weights and become the primary drivers of returns, while the losers shrink into irrelevance. In equity investing, you should not expect the average stock to deliver the average result.

Stock markets follow a power law. In a power law distribution, the average result is pulled higher by a few positive outliers, while most results are far below average. This is distinct from the classic “bell curve” normal distribution that characterizes most randomly distributed variables. The charts below illustrate these two distribution functions.

Markets Tend to Follow a Power Law of Distribution

Chart of Normal Distribution and Power Law DistributionSource: Thornburg

For example, the height of American adult males is normally distributed around a mean of 5’9”. In a normal distribution, the median observation will be equivalent to the mean (or average). If you took a group of 100 men, arranged them in order of height, and then pulled out the man in the 50th position, he would probably be 5’9” tall. The median and the mean are the same.

This does not hold true for stocks, particularly over longer horizons. Let’s return to the MSCI United States Index to see if it exhibits a power law distribution. Over the ten and half years of our analysis, the index delivered a total return of 13.5% annualized, or 278% cumulatively1. That’s the market average. There were 1,004 distinct stocks in the index over the period. The best was Nvidia Corp, which returned nearly 15,000% cumulatively. On the other side, there were several stocks roughly tied for worst that lost around 90% of their value, including First Republic Bank, Affirm Holdings, and SunEdison Inc. The median stock, or the one right in the middle of the list, was Eastman Chemical Co., which returned 62% cumulatively, or about 5% per year. As we should expect from a power law distribution, the median is not representative of the average result, but rather significantly worse than average. The average was pulled up by a very small number of positive outliers.

Yes, the Returns of MSCI U.S. Index Constituents is a Power Law Distribution

Source: BloombergThe performance data quoted represents past performance; it does not guarantee future results.

At Thornburg, we hunt for these outliers. Our portfolio managers and analysts search globally for exceptional companies that have the potential produce these positive results. This may come in the form of powerful growth that exceeds market expectations, or more consistent growth that compounds over time. Both types of companies populate the lists of top performing stocks. As active investors, we assemble concentrated portfolios of stocks with these characteristics, and aim to hold them for the long term to allow compounding to work.

While commentators are correct to observe that this year’s market is narrower than normal, market breadth is a myth. A few stocks drive most returns over time. Power laws are the rule, not the exception. It’s not just academics who have figured this out. As Warren Buffett acknowledged in his most recent letter to Berkshire Hathaway shareholders: “The lesson for investors: The weeds wither away in significance as the flowers bloom. Over time, it takes just a few winners to work wonders.”

Discover more about:

Stay Connected

Subscribe now to stay up-to-date with Thornburg’s news and insights.

More Insights

The silent generation represented by two ladies hugging.
Advising Clients

Managing Legacy Wealth Part 1 The Wealth Holders

Become an expert in Managing Legacy Wealth and position yourself for success
Ozempic Insulin injection pen or insulin cartridge pen for diabetics. Medical equipment for diabetes parients.
International Growth

Therapies for Treating Obesity Create XL Opportunities

Groundbreaking new anti-obesity drugs are poised to revolutionize the healthcare industry, giving way to tremendous opportunities for investors.
Advising Clients

5 Essential Reasons the Public Need Financial Advisors

Financial Success Begins and Ends with a Financial Advisor
A few people using a map and a compass to pinpoint their current location and future destination.

Navigating Recession, the Fed, Inflation and Borrowing

Jeff Klingelhofer discusses when the recession may finally arrive, whether the Fed will tolerate inflation above its 2% target, and that surging government debt.
Business meeting with financial advisor in the office
Advising Clients

Help Clients Make Better Social Security Claiming Decisions

Social Security is another area where you demonstrate your value to clients.
Woman carrying shopping bags in a buy and hold strategy
Advising Clients

Morningstar Study Makes the Case for Buy and Hold

Convincing clients to stay the course is one of your greatest challenges.

Our insights. Your inbox.

Sign up to receive timely market commentary and perspectives from our financial experts delivered to your inbox weekly.
This field is for validation purposes and should be left unchanged.