Hi, I'm Andrew Sweeney, an institutional portfolio manager with PH&N Institutional. And today I'm going to talk about, What to Make of Market Concentration: Some Lessons from the Past, and a Guidebook for the Future. But before we dive into it, I want you to sort of close your eyes and imagine that you're in an environment where a handful of giant companies have near-monopoly businesses dominating the economy and dominating the stock market to a point where these companies represent over nearly 40% of the stock market.

Now, you probably think I'm talking about today's technology stocks, but I'm actually describing the U.S. railway monopolies in the early 1900s. So the theme of market concentration is not a new one. It does ebb and flow as we go through the years. But what we're going to talk about today is we're not going to talk about the railways, we are going to talk about the current levels of market concentration, the impact it's had both on markets and on active managers who struggle to add value in this market environment. We're going to look to the past for some lessons and a guidebook of how to think about the current situation. And finally, we'll offer some thoughts as to what you, as asset allocators, might do and might not want to do in this kind of environment.

Now, we're not going to give you a forecast. So if you came for stock picks you're going to be disappointed. But before we dive in, let's go back to those railways for a moment. So within 20 years of the peak, combination of technology, competition and regulatory headwinds reduced the sector from 38% of the U.S. stock market to less than 10% of the index.

There's a great saying from Mark Twain, which is “History doesn't repeat, but it sure does rhyme.” So, hey, let's dive in. Now, we're going to start by recapping a few things you probably already know. The first of which is that the U.S. stock market has been driven by a small number of stocks, commonly known as the Magnificent Seven.

In the last couple of years, the S&P 500 has been up between 20 and 25% a year. And yet those seven stocks accounted for almost half of the market return. And the other 493 accounted for the rest. If we take out those top performing stocks, you can see the yellow line on the left, the market is still gone up a lot, though nowhere near as much as it has with the Mag Seven.

The result of this is that the U.S. has outperformed the rest of the market by a pretty wide margin. You can see that on the right-hand side, where we show the U.S. versus some other global indices, and this has really been driven mostly by those Mag Seven stocks. Now, this outperformance has led to the U.S. now representing an enormous amount of the global equity market.

And you can see this on the left-hand side. The blue line shows that the weighting of the U.S. in the MSCI world benchmark index was nearly 75% at the end of December 2024. You could also see on the bottom right, it almost looks like a ski hill, that EAFE, which was once the same size as the U.S., is now down to 24%.

Of course, EAFE represents Europe, Asia and the Far East or Australasia and the Far East, and its weighting has basically been cut in half over the last 15 years. But I think the fascinating thing is, if you look in the centre of this slide, you only have to go back to March of ‘08, where the U.S. was about the same size as EAFE.

And so we really have had that spectacular, outperformance by the U.S., which has led to very high concentration within global equity markets. But on the right-hand side, you can see that the concentration within the U.S. market is also very high. This chart goes back a hundred years to 1925. And you can see we have seen other periods of concentration but this one is at the peak. And you can also see that they tend to unwind themselves over time. Now, this concentration has been great for nominal returns, but it really has been a struggle for active managers and active managers have really had a tough time in recent years. But what's interesting is if you look at the last 30 years ending in 2019, so from 1990 to 2019, active managers had a pretty good run.

They actually, the median active manager in global equities, had beaten the index by about 2.5% per year over that time. Now, since Covid, that +2.5% has become -1.5%. So the last five years managers have struggled and we haven't broken out 2024 by itself because it was an epically difficult year for global equity managers.

They lag the index by a whopping 5.5% during 2024. So we've gone from a period where managers did well to a manager to a period where managers have really, really struggled. Now, this has caused lots of questions from clients like yourselves. Questions about active versus passive, like why would we pay for active management when managers as an industry can't outperform?

If you go to the U.S. and you're at an investment conference, the theme you'll hear about is,  “Why should we own anything other than U.S. stocks? Why do we own EAFE if all it ever does is underperform?” We've seen in some of the conversations that we've had with individual investors, they've said things like, “Well, forget this, international stocks, why do we own anything other than The Magnificent Seven?

That's what seems to be working.” And so this kind of performance, this concentration has led to all of these sort of knock on effects related to active management. And that's the sort of thing we're going to talk about today. We're not only going to talk about the markets, but we'll talk about how this has impacted active management.

Now, we've talked about the fact that the U.S. has outperformed. The question is, why? Well, there's really two main factors. It's fundamentals and valuation. Now when we talk about fundamentals we've often heard especially until recently, the concept of American exceptionalism. Now you might find that grating as a Canadian. But the reality is, is that the US has had fundamentally better economic growth over the last ten years, and that has led to U.S. companies doing much better.

You can see this on the left-hand side, where the yellow represents the EPS growth of the S&P 500. EPS growth over that ten years from 2014 to 2024 was up 100%.  During the same time period, the EAFE had only 10% EPS growth. And so the U.S. had this incredible tailwind of much stronger fundamentals that led to much higher levels of EPS growth.

Now, on top of that, because the U.S. had that growth, investors then were willing to pay a bigger premium. And you can see that there was significant, expansion of P/E or price to earnings multiples such that the S&P was up 192%. This is just the price return versus EAFE up 33% over that time. Now that P/E expansion, if you look at the right-hand side you can see that the U.S. market, the multiple has expanded.

Now this data goes back basically 70 years to 1955. And you can see that the average multiple on the market over that time period is about 15 times. And today we're at nearly 22 times. And so that level of earnings growth has really led to this much higher level of multiples. Now what's interesting is the average U.S. stock is more expensive than its non-U.S. peer.

But a large part of this multiple expansion has been driven by the Magnificent Seven. So let's turn and talk about this group right now. So who are the Mag Seven? It's Microsoft, Alphabet (the parent of Google), Nvidia, Meta (parent of Facebook), Apple, Amazon and Tesla. Though with Tesla's 2025 performance being down some 40% year to date, maybe soon, we'll be talking about the Magnificent Six.

But let's talk about these businesses. So these are great businesses. They really are. They have global scale. They have dominant market positions with huge moats protecting their businesses. They've got huge profit margins and torrents of free cash flow despite some massive amounts of capital spending. And in fact, all these companies are on the leading edge of artificial intelligence.

So let's use Microsoft as an example to bring this to life. Microsoft really is an amazing business. They generate about $250 billion of revenues, and they're growing at about 15% a year. That's $30 billion in revenues a year that they're adding to the business. Microsoft's a dominant franchise. It's a business that has 45% operating margins and earns nearly $90 billion a year. That's 9-0 billion.

It is a fantastic business. They dominate your desktop, probably the operating system that you're using as you're watching this video. They're one of the leading hyperscalers that's really building out data centers for AI. And they're also very well positioned in AI. They have an investment in the ChatGPT developer, OpenAI. So in short, Microsoft is a great business, and it should demand a higher market valuation than the rest of the market.

It's a company you typically want to own. Now, but the question isn't, as an investor, the question isn't whether they're good companies. The question is whether these are likely to be good stocks going forward. And this is where the crystal ball gets a little bit foggy. So let's look at the challenges facing these companies. And one of the major challenges facing all of the Magnificent Seven is that they've become much more capital-intensive businesses, and they've become much more cyclical.

Now, the spending around AI has seen these companies significantly increase the amount of capital that they're spending to build out data centers, to buy chips from Nvidia, to build out further infrastructure. So, for example, before hyperscalers, this is Amazon, Microsoft, Google and Meta. They're forecast to spend cumulatively between the four of them in 2025 alone, $320 billion between the four of them.

So an average of $80 billion per company. Now,  to give you a sense of that size, we went back through history and we tried to find what was the largest CapEx we've ever seen from an individual company. And the largest we could find was ExxonMobil. The oil company once spent $34 billion in a single year. These four companies are going to spend nearly ten times that in 2025 alone.

It's absolutely incredible. Now, the other element with these companies is that there's an increased level of competition, not just from external players, but actually from amongst themselves. And I think one of the things that people don't necessarily recognize is that these companies tended not to compete too much with one another in the past. They tended to stay in their lanes.

And so we can now see that those lines are really blurring. Probably best seen if you think about Google's search franchise where once upon a time, well, I mean, the word Google is in the dictionary because if you were going to do a search, you were going to do it on Google. When you look at what's happening today with all the rise of AI chat bots, the reality is, is that Google is losing market share, particularly in mobile, and they're losing it to various different chat bots. And so, they're owned by some of these other companies. So we are seeing a higher level of competition. We also see that, I think, three of these companies are designing their own chips to try and reduce their dependency upon Nvidia.

Three of them are in the advertising business, and two of them have competing streaming services. So there's no denying today that the overlap between these companies is much, much more significant than it's been in the past. Now, the other element I think that's important is that growth is hard to sustain when you get really big.

So we come back to Microsoft. There are $250 billion in revenues, growing 15% a year. If they grew at that rate over the next ten years, you just sort of build that out in a spreadsheet, they'll be at $1 trillion in revenue. Now, I'm not going to build a spreadsheet to tell you that it's kind of unlikely that Microsoft is going to have $1 trillion in revenue in ten years.

And so these are some of the challenges that are really associated with these companies. So the next question is what's going to knock them off their perch? What's it going to be? It could be any number of things. I think the reality is that what you learn from history is that you don't necessarily know what it's going to be, but there generally is something that comes along.

There's a wonderful concept from the economist Joseph Schumpeter, who described the term creative destruction. And if we go back through history, let's look at how creative destruction has impacted these kinds of companies in the past.

Here we've shown the largest companies in the U.S. stock market in 1980. Now, 1980 oil was at $40 a barrel. And at the time, it was forecasted that it was going to $100 a barrel. So five of the top ten companies in 1980 were oil companies. And there was an oil services company called Schlumberger that was, I think, number 5 or 6 on the list.

And Schlumberger was basically the Nvidia of its day. It was an oil services technology company, and it sold to all of the global oil companies. And so it's quite amazing. So there's your list from 1980. Let's fast forward to the year 2000. We've highlighted the three companies that made it from 1980 and remain on the list in 2000, so only three made the jump.

Now, 2000, as you know, is the peak of the technology bubble. And given the view the internet was going to change the world, it shouldn't surprise anyone that five of the top ten stocks were technology companies. But what is most incredible to me, and I was a technology analyst in the year 2000, is that despite the internet changing the world, only one stock from the year 2000 is still on the list in 2024.

And that's Microsoft. Lucent, long gone. IBM and Cisco, mostly irrelevant. And Intel is in the intensive care unit. If you look at the top ten list today, yet again dominated by tech stocks riding this time they're riding the AI wave. And so there's no guarantee these companies are going to be on this list. And so if we ran this list forward to 10 or 20 years, history tells you that the list is going to change.

And some of these companies will fall off the list. And some of these companies will end up in some very, very difficult times with the rise of competition. So it's very, very difficult for great companies to stay great forever. Now, we've talked about some individual companies. Let's zoom out and talk about the overall market. A couple slides ago we showed that the valuation on the U.S. stock market was quite elevated relative to history.

And the one thing we know is that heightened valuations of this degree tend to increase the probability that returns are going to be muted going forward. And so, what we've shown on this chart is we've shown on the y-axis the ten year forward return of the S&P 500. And on the x axis horizontally we've shown the starting P/E.

And so you can see that there's a very distinctive downward slope where the higher the starting P/E the lower the ten year forward returns have been historically. And that the lower the starting P/E those have tended to lead to higher returns. You can also see, because we've helpfully marked it with a bright yellow line, is the P/E at the end of December of 2024 tends to be at the right-hand side of this chart, which suggests that over the next ten years, returns could be quite muted, possibly even negative. Now the reality is, is valuation is a poor indicator. Over the short term, it's not going to tell you where the market's going to go up or down over the next quarter or the next year.

But over the time horizon of an asset allocator, a ten-year time horizon valuation becomes a very, very powerful force. So now let's look at how markets and active managers have performed in different market environments. And this is one of my absolute favorite charts. It shows in each one of the bars year-by-year calendar performance of the U.S. market.

This is the S&P 500. And you can see that the U.S. doesn't outperform all the time. In fact, there are periods, a significant period, a decade, where the U.S. lagged global markets, and in fact, had about a zero rate of return in U.S. dollars. Now, when we were building out this material, I looked at this and I was like, I was in markets during this time.

 And I remember the U.S. underperforming, but I didn't think it was this bad. So I reran the data myself. And what you find as a Canadian dollar investor, the U.S. stock market, from the peak of the tech bubble to the end of the financial crisis, actually generated negative returns, -2% per year for Canadian dollar investors. And so on top of the U.S. market lagging something that you'd never expect to happen, happened, which is the Canadian dollar actually rose during that time period, which you know, might very well be the setup we find ourselves in today.

Now, the other element with this story is you can see it's really three phases. And if we look at the first and the third, the 90s and then post financial crisis, you can see that the annualized returns in the U.S. market were really, really strong, up 21.5% in the 90s per year and up about 17.5% from 2011 onwards.

You can also see at the very bottom, the average or the median manager value added over both those time periods was quite poor, negative in both cases. And these were both markets that we saw significant levels of market concentration. The 1990s it was concentrated in technology. And lo and behold, today it's very much the same thing. But if we go to the shaded area in the middle, what's fascinating, the market was terrible, but it was actually a golden era for where the median manager actually added about two percentage points a year. And I think the key point here is that manager performance is really cyclical or active manager value added is cyclical, not secular. There's periods where active managers tend to do well. There's periods where active managers tend to do more poorly.

Market concentration, those types of environment, active managers tend to do poorly. Now we can't talk about market concentration and not mention Nortel. Now, as most people are aware, Nortel was a telecom equipment company. It sold to phone companies around the world. It was a steady but not spectacular business until a new technology came along that supercharged growth. The build out of the internet led to this CapEx boom.

It was billions and billions of dollars of spending on fiber optics and data networking equipment. Nortel, along with Lucent and Cisco, we talked about a few minutes ago. They all benefited from this boom. And investors drove these companies to valuation multiples we'd not seen before. Now this chart is not of Nortel's share price. It's of Nortel's weight within the TSX.

And you can see that Nortel was already a fairly decent sized company before rallying and becoming by far, the largest company in the TSX. It actually peaked at 35% (the index was then called the TS 300) of the index. More than a third was in a single stock when the tech bubble burst. Nortel was one of the big, big casualties.

You can see that the weighting fell significantly. Stock fell about 90% over the subsequent couple of years, and then ultimately filed for bankruptcy a few years after that. Nortel is a perfect example about how market concentration impacts active managers. The bar chart shows how median active performance has done during this time period. Up until 1998, active managers looked pretty good.

They'd outperformed quite significantly and quite consistently as Nortel rose and it first hit 25%, and then 30% of the index. Active managers had a hard time keeping up. And you can see that those bars go from being above the line to below the line. And if you look carefully at the scale, at the worst, the median active manager was 15 percentage points, 1-5, behind the index, because of Nortel. Now this question of performance became not just a performance issue, but one of prudent diversification. So in Canada, there's mutual fund rules and there's also pension rules that typically limit a single holding to 10% of your portfolio. And so managers often were capped at 10%. In some cases, clients gave them waivers and they were able to hold even more Nortel.

But I'd say you'd be hard pressed to find any manager that had 35% of their portfolio in Nortel. And so managers created indices like the TSE 299 that excluded Nortel. And interestingly, the index providers actually created what we think was the first capped index, the TSX Capped index. That's now the index that most people have as their benchmark.

Even to this day, even though we've never actually had a stock get back to a 10% weighting. Now we come back to the active manager performance as you see the Nortel weighting decline. You can see that active managers earn back everything that they had lost, and it set up a golden period where active managers outperformed significantly over the subsequent five years, which is a silver lining in an otherwise disastrous story.

Now our next example, we're going to go back another decade, and that is to Japan in the 1980s. And it's hard to believe today when Japan is, I think, only 5% of developed markets and doesn't have a single company in the top 50, that at one point Japan was 50%. It was half of MSCI World. And six of the top ten largest companies in the world were Japanese.

The story at the time was Japan had mastered manufacturing and the concept of continuous improvement. American companies just couldn't compete with the Japanese counterparts. As the Japanese companies grew, they started to encroach on U.S. soil. They bought control of Rockefeller Center, in midtown Manhattan, the heart of American capitalism. And not one, but two Japanese electronics companies bought control of Hollywood movie studios.

And a client reminded me just last week that Japanese investors also bought control of Pebble Beach Golf Course for $1 billion. Now, this caused a huge amount of consternation. And you can see this quote from none other than Donald Trump talking about, you know, the Japanese. The risk of the Japanese to the U.S. economy. Now, in five years, the Japanese stock market more than tripled in value.

The Japanese market peaked at 65 times earnings. It had never been above 25 times in history. And yet it got to 65 times. And it really is one of the most egregious examples of a bubble in modern history. And it's resulted in what we call the lost decade or lost decades. And as you can see, it's taken the Japanese market 35 years to get back to the highs that it hit in late 1989.

Japan has struggled with persistently low inflation, stagnated growth and aging demographics. Now  we're not able to get great data on how Japanese equity managers performed during this time period. But one of the things we do know is that for global equity managers, one of the trades that almost everyone had on over the last 30 years was being perpetually underweight Japan, which led to a real tailwind where active managers were able to add value by literally avoiding much of the unwind of this particular bubble.

And I think it makes sense now to spend a bit more time talking about the performance of active managers in a bit more detail. And so what this chart shows is the relative performance of the median global equity manager against the MSCI World Index. The shaded areas above the line is where managers are outperforming. And below the line is where managers are lagging.

Now if you look at this chart, you can see that to the right, active managers have struggled considerably in the last few years, as we mentioned right at the outset. And that's really led to some questions from clients about active management. But if you look at the overall chart, you can see that active management has typically worked.

In fact, the squiggly line is above zero, more than 70% of the time. So active management has worked quite consistently. Now you might say, well, hold on, there were some golden years in the 90s and early 2000, but more recently markets have gotten more efficient. Now we'd see the point that markets are more efficient over the last few decades.

But we wouldn't necessarily agree that markets are getting more efficient in even the last 4 or 5 years.  You'd be surprised. When we talked to some of our global brokers and asked them the source of all the different market flows, you'd be surprised at how little market trading on a day-to-day basis is really been driven by fundamental investors.

A huge amount of flows are driven by ETFs or passive management. They're driven by structured products. They're driven by retail investors, and they're driven by high frequency traders. So we don't think markets are getting more efficient. We think they're relatively efficient, but that we're really at a period of cyclical rather than secular underperformance. But it doesn't answer the question of why active managers have struggled so much in recent years.

And so we think that some of the structural biases that active managers typically have really been quite costly and led to some of this underperformance. And so let's break down three of them. The first is that, rightly or wrongly, the average manager tends to hold some cash. When we look through the database, the average manager is at about a 2.5% cash weighting.

Well, in a market where markets are up 25% a year, that's going to cost. It could cost you as much as 60 basis points in a given year. So that little bit of cash can be quite costly. Now secondly, managers typically own some stocks that are outside their benchmark. Sometimes these are smaller cap stocks. Often, for a global equity manager it's emerging market companies.

And again, when we look at the database, the average global equity manager has nearly a 7% emerging market exposure, in an environment where emerging markets have lagged global equities by 10 to 15 percentage points a year. That's going to add up to be a significant level of underperformance. But the third example or the third bias, is a little bit harder to quantify, but arguably the largest driver and that is that active managers typically have smaller average market cap than the index, particularly when the index is concentrated and a handful of mammoth companies. And we've shown you the weighted average market cap. You can see that active managers are just over half of the index. And strategies like a low volatility strategy are even below that.

So let me unpack and spend a moment and explain what's happening here. So, if you think of the Mag Seven and you look at, say, the global index, they're about 30%, you'd be hard pressed to find an active manager that's 3% overweight each one of the Magnificent Seven, because that would mean that those seven companies represent nearly 50% of their portfolio.

That's quite unlikely to happen. And so what you find is that managers tend to be collectively underweight the Mag Seven. Well, they don't own all of them. And the ones they own, they would tend to have modest overweight. That means that they're collectively overweight the rest of the market. If you're underweight the Mag Seven, mathematically you need to be overweight the rest.

And what we see there is, is managers might be comfortable having a 2% or 3% overweight in a smaller, still large but smaller company. And so you end up having a situation where investors are skewed out of the Mag Seven that are working, and into companies that are much smaller, and that, this relationship of market cap bias and relative performance is really shown clearly on the next slide.

And so this slide, let's break down what's going on here. This shows the proportion of mutual funds that outperform their benchmark on the y-axis. So as we get higher up that's more managers outperforming. And then along the horizontal x-axis we show small cap versus large cap relative performance of the index. And so we've used Morningstar data.

And this data I think goes back 63 years. And so each one of those dots represents a year. And it shows both whether mutual fund managers tend to outperform and what was happening on small versus large cap stocks. Now if you look at this you can see that the line clearly has an upward slope where small caps are outperforming, the average mutual fund manager in the U.S. tends to do better. And when small caps are underperforming the bottom left, they tend to do more poorly. And so this I think, confirms the point we described on the previous slide, that there tends to be a smaller cap bias amongst managers, and that as small caps outperform, managers tend to outperform. That red dot that you can see on the bottom left, that's the year of 2023. We don't have the data yet for 2024. But if we had that data, I think it would be somewhere near that red dot and would be quite consistent with what we're showing. Now, another way to look at this is that this market concentration leads to very, very narrow market returns, meaning that fewer and fewer companies outperform the index.

Now, this chart shows the percentage of stocks that outperform the index in any given year, year-by-year. And over the last 35 years. But 48% of stocks outperform. So not quite 50% but close to half the mark. Or have half of the stocks in the market will beat the market in any given year. You can also see that it ends up being quite cyclical.

And if you look carefully, you can see that there are two periods of significant market concentration. We're only 25% to 30% of the stocks within the market beat the market. You saw this during the tech bubble in 1999, and you've seen it again in 2023 and 2024. So, it shouldn't surprise you that active managers would struggle in this environment.

70% of the stocks are underperforming. And as we showed you earlier, these tend to be stocks that managers own within their portfolio. Like many of the things we've shown you today, this trend tends to reverse itself. And when it does, we'd expect active manager performance to improve. Now, we don't want to leave you with a message that the market's expensive and there's really not much you can do about it.

And so here what we've done is we tried to break apart different markets and understand what's happening with these indices to see where the opportunities might lie. We show a range of market indices. The bars represent the trailing 12-month P/E or price to earnings multiple. And that gold diamond represents the average P/E over the last 15 years going back to 2010.

And when you look at this chart, you can see that the S&P 500 looks pretty expensive. It's the tallest bar on the chart. And it's actually a long, long way from its average P/E. So consistent with some of the data we showed you earlier. If you skip over a couple, you'll see that the MSCI World is the next most expensive.

And that's really because the MSCI World is really made up of, about 75% of it, is the S&P 500. Now the second column is fascinating. It's the S&P 500 Equal Weighted where each one of the stocks in the S&P are weighted at 20 basis points. They're equally weighted. And you can see that the equally weighted S&P is quite a bit less expensive than the market cap weighted.

And it's not much more expensive than it has been through the last 15 years. You can also see as you move towards the right, there's some markets that look pretty darn attractive, whether it's the TSX, the EAFE Index of the rest of the developed world, or emerging markets. All of them don't have particularly high multiples and don't really look expensive relative to history.

In fact, the EAFE looks quite cheap. Now, in the table at the bottom, we've shown an estimated 2025 EPS growth. And if you look at those numbers, you'll see that the S&P 500 has the highest, but that the TSX and emerging markets are not far behind. I bet if you reran this data at the end of March or into April, I think what you'd find is that those growth numbers in the S&P have probably come down a little bit, given what's happened in the economy and markets, and that the S&P really doesn't have higher, expected earnings growth in 2025 than any of the other indices.

The last thing I want to highlight on this page is the last line, which is our own estimates of long-term capital market returns, our long-term ten year forecast time horizon. And you know, lots of people run their run their numbers. These are ours. And based on our long-term expected rates of return, the S&P 500 is by far the lowest index.

We think it's potentially less than 5%. And that if you look again to the right-hand side, whether it's the Canadian market, EAFE, or emerging markets, all three of those look quite attractive to us. So we think there are potentially some good market opportunities within the stock market. You just need to look beyond just looking at the U.S. and look at the things that haven't necessarily worked over the last ten years.

So we're coming to the end of our time. So let's wrap up and talk about some conclusions and things that you might do and you might not do. Given this market environment, we're going to start with the don'ts, because I think those are actually even more important than the do’s. The most important thing, the most tragic thing I think that investors could do today is to throw in the towel on non-U.S. stocks.

Markets tend to mean revert. The U.S. has had an incredible run over the last 10 to 15 years. But as we've shown you, there have been periods where markets have those kinds of returns. They tend to lag in the subsequent environment. And so please don't throw in the towel on non- U.S. equities. The other element we suggest (and this is a bit self-serving) is don't abandon active management.

Hopefully we've shown you today that active management underperformance is mostly cyclical rather than secular. And that as market environment changes, active management performance will improve.  In terms of the things you should do, I think the most important thing that an institutional investor should do is just make sure that you don't have significant drift within your strategic asset allocation.

If market returns have led your portfolio to drift and be significantly overweight the U.S. and underweight some other asset classes, you really should correct it and take it back to strategic. Take that drift off the table. And perhaps another thing you might do in terms of an active thought is, is actively look at equity strategies that have lagged.

That might be looking at the Canadian equity market, it might be taking a second look at emerging markets. It might be looking at strategies that have become out of favour, like low volatility strategies or small cap strategies. But we really do think that there are significant opportunities within the overall equity markets. You just need to look beyond the U.S., or the dominant U.S., and find some of these opportunities beyond owning just those mega-cap Magnificent Seven stocks.

That's the end of our prepared presentation today. Thank you so much for your time. We appreciate you spending the time, and hopefully you found today's conversation to be informative and hopefully at least mildly entertaining. Thank you again for your time. Have a great day.