The reopening of Hormuz gives renewed momentum to equal-weighted strategies - 29 June 2026

A major theme for global stock markets since 2023, AI is going through a new phase of profit-taking. As the marked decline in energy prices restores confidence in global growth, equal-weight equity strategies are taking up the baton once again. Here is why.

Since 2023, the theme of artificial intelligence (AI) has established itself as an essential investment theme. Its volatility nevertheless remains high, owing to the sometimes extreme positioning of certain investors and the uncertainties inherent in this technological revolution. Indeed, the real profitability of the colossal investments in data centres remains uncertain, the sector’s boom is creating bottlenecks (memory, semiconductors), and the split between future winners and losers remains fluid and speculative.

From a more tactical perspective, investors had favoured AI during the Iran crisis, as it weakened a large part of the market because of the threats hanging over global growth. Now that these risks have diminished considerably, global stock markets have shifted from a phase of “concentration” to one of “broadening out”. The relative performance of equal-weighted indices clearly illustrates these successive movements (Chart 1).

By compiling the “AI” baskets of various brokers (Goldman Sachs, Morgan Stanley, UBS), we estimate that stocks directly or indirectly driven by the AI investment boom account for around one third of the stock market capitalisation of developed countries (41% in the United States, 14% in Europe, 22% in Japan, etc.). When stocks are equally weighted, the share of AI falls to just 10%.

The sector comparison between a traditional global index and its equal-weighted counterpart also helps to illustrate clearly the difference between these two investment strategies (Chart 2). The information technology and communication services sectors (which include Google, Meta and SoftBank) account for 38% of Bloomberg’s traditional global index. By contrast, the equal-weighted index is dominated, at 37%, by financial and industrial stocks.

In the current environment, investing in an equal-weighted global equity portfolio is therefore not a defensive approach; on the contrary, it is an option that is sensitive to the momentum of global economic growth. It is simply less exposed to the ups and downs of the AI theme (1).

Thanks to this profile, the equal-weighted index enjoys a less stretched valuation than the traditional index in terms of P/E ratio (Chart 3). Standing at around 16x expected earnings over the next twelve months, equal-weighted global equities are trading on a valuation in line with their historical averages, well below that of the traditional index (close to 19x).
According to the analysts’ consensus, the aggregate earnings of the equal-weighted index are expected to grow by +14% in 2026, followed by nearly +10% in 2027. Although slightly below the forecasts for the traditional index (+16% and +11%), this modest gap probably does not justify such a large valuation difference (a 13% discount) between the two strategies.

• (1) Some industrial stocks are admittedly sensitive to the AI investment cycle, but they clearly remain in the minority.

The exposure to global equities within Dorval AM’s funds is based on this equal-weighting principle. This enables us to limit portfolio concentration, both at the level of individual stocks and across sectors and regions.

This strong conviction is expressed through an ultra-diversified “core” basket, which makes up the bulk of our exposure to global equities. At the same time, we manage our exposure to the AI theme independently, via a basket of specific stocks — themselves equally weighted — whose size and composition we adjust according to the environment. At present, this dedicated AI basket is 50% hedged through a short position in the Nasdaq 100.