LEADERSHIP WIDENS AS SMIDS OUTPACE THE S&P 500
Brian Belski, founder, CEO and chief investment officer at Humilis Investment Strategies, has been calling for market leadership to broaden beyond the mega-cap names that have dominated in recent years—and he thinks that shift is already underway.
His argument hinges on a changing market backdrop. In his latest “Brief” out on Monday, Belski says equities are moving into a more earnings-driven phase. In that environment, the biggest winners of the past cycle tend to see their valuation multiples level off, opening the door for a wider group of stocks to participate.
Put another way, Belski believes investors are starting to pay closer attention to fundamentals—actual earnings and results—rather than chasing big-picture themes like AI that may or may not ultimately deliver strong returns.
Even so, he notes that many investors remain skeptical, arguing that leadership is still concentrated and that the broadening trend isn’t real.
But the data suggests otherwise. The S&P 1000 (.SP1000), which tracks small- and mid-cap stocks (SMIDs), is outperforming the S&P 500 CBOE:SPX by a notable margin this year—up more than 18% vs. just over 9% for the broader index.
In Belski’s view, that’s a clear sign leadership is expanding.
He also thinks this shift has staying power and could extend into the second half of the year. More importantly, he sees this broadening as a healthy development. Historically, it tends to provide a stronger, more durable foundation for equity gains over time.