It’s a Stock-Picker’s Market

Chart of the Week for October 13-19, 2000

Just because the S&P 500 Index was in negative territory for the last two quarters doesn’t mean all the stocks in the index produced losses. Although the overall index declined (1.4)% YTD through 10/4/00, a closer look reveals that 256 stocks in the Index actually produced positive returns. The implication? That this is a stock-picker’s market.

The S&P 500 is a market cap-weighted index, meaning that companies with larger market capitalizations make a greater contribution to the Index’s overall performance. As a result, a small group of large companies have the potential to skew the weighted average return of the Index positively or negatively. Remember 1999, when the Index returned nearly 20%, but 340 stocks had negative returns? Back then, one had to hold the largest names to match or beat the Index. Today we see the reverse. With 256 stocks in positive territory, there are certainly opportunities for return to be found, even though the large names have sold off and the Index return is negative.

As the market continues to gyrate and once-shining sectors lose their luster, active management that emphasizes skillful stock selection can produce above-average returns. The Vantagepoint Funds are a case in point. All of the Vantagepoint US equity funds outperformed their benchmarks for the third quarter and the year to date.

* This information is being provided for educational purposes and is not intended to be construed as or relied upon as investment advice. ICMA-RC does not offer specific tax or legal advice. Individuals are advised to consider any new investment strategies carefully prior to implementing. Past performance does not guarantee future results. Investment returns and principal value will fluctuate, so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data illustrated. For performance data current to the most recent month end, contact ICMA-RC Services, LLC by calling 1-800-669-7400 or by writing to 777 North Capitol Street, NE, Washington, DC 20002-4240, or by visiting www.icmarc.org. Please consult both the current Vantagepoint Funds prospectus and MAKING SOUND INVESTMENT DECISIONS: A Retirement Investment Guide carefully for a complete summary of all fees, expenses, charges, financial highlights and investment objectives, risks and performance information prior to investing any money. Vantagepoint securities are distributed by ICMA-RC Services LLC, a broker dealer affiliate of ICMA-RC, member NASD/SIPC. For a current prospectus, contact ICMA-RC Services LLC, 777 North Capitol Street NE, Washington, DC 20002-4240. 1-800-669-7400.