FAAANM stocks are Facebook, Apple, Amazon, Alphabet, Microsoft and Netflix
According to the research here: https://www.yardeni.com/pub/faangms.pdf, Since the start of 2013 (nearly 10 years ago), the FAAANM stocks returned 606.5% vs 140.4% for the S&P 500 minus the FAAANMs.
Since 2008 the FAAANMs grew their earnings by over 600%, whereas the non-FAAANM stocks in the S&P 500 grew their earnings by only 25%.
The FAAANMs currently represent 20% of the S&P 500.
Very few people would want to put 20% of their assets into just 6 stocks. Especially not the six which have an average p/e ratio of 23.8 which is some 34.4% higher than the average 17.7 p/e ratio for the rest of the S&P 500.
So why would anyone want to benchmark themselves against the S&P 500?
Wouldn’t it be better to measure a US portfolio against the S&P 500 Equal Weight Index (SPXEW), or against the Invesco S&P 500 Equal Weight ETF?