Market regimes have shifted rapidly in recent months, making it more important than ever to stay aligned with evolving leadership trends. As an alternative core equity approach, you may want to consider the NDW Large Cap Core Model (TR0.
Market regimes have shifted rapidly in recent months, making it more important than ever to stay aligned with evolving leadership trends. As many of you know, simply indexing client portfolios to the S&P 500 and hoping to ride long‑term market strength is not always sufficient, especially in periods of dispersion and rotation. These shifts have created an environment where traditional cap‑weighted exposure can lag meaningfully, as leadership narrows and sector performance diverges, underscoring the growing need for a more tactical, adaptive approach.
As an alternative core equity approach, you may want to consider the NDW Large Cap Core Model (TR) (NDWLCCORE.TR). In brief, the model:
- Selects the top 30 companies from the largest 500 U.S. stocks by market cap.
- Sells a position once it falls below the 150th rank in the matrix.
- Applies a 40% sector cap to prevent concentration risk.
- Utilizes a 1–10% rebalance collar.
To start the year, the model is up 9.03%, outperforming the S&P 500 Total Return benchmark (TR.SPXX) by more than 9 percentage points. Over the past year, the model has returned 34%, roughly 16 points above the benchmark. Since inception in 1993, the model has delivered an annualized return of 15.2%, exceeding its benchmark by more than 4.5%.
For those interested in deeper analysis, the Stats tab provides additional performance and risk metrics. While the model carries slightly higher volatility, its Sharpe Ratio (0.62 vs. 0.56) reflects stronger risk‑adjusted performance.
Much of the recent outperformance stems from the model’s strategic overweight to areas of relative strength and underweight to areas showing deterioration. As shown in the sector comparison below, the model remains underweight Technology and Financials—two sectors that have weakened technically in recent months—while overweighting Industrials and Basic Materials, both of which rank among the top 3 sectors in our DALI framework.
For those looking for single-stock ideas, it is sometimes helpful to look at a model’s holdings to identify leadership names and relative outperforms. Within the NDW Large Cap Core Model, the model purchased Howmet Aerospace Inc. (HWM) in July 2024. Since then, the stock has had an absolute performance of 163% over the course of just under two years. The stock is up over 20% year-to-date (YTD) and sits on two consecutive buy signals, after completing a double top break at $228 last month. The 5 for 5’er has been in a positive trend since 2022 and currently ranks in the top quartile of the aerospace airline sector matrix. HWM sits near overbought territory but is still actionable at current levels. Initial support is at $208, with additional support between $188-$192. Initial resistance can be seen at $264, its previous all-time high.
In conclusion, the NDW Large Cap Core Model can provide a viable solution for those interested in large‑cap exposure with a momentum overlay. Beyond simple index replication, the model offers a disciplined, rules‑based framework designed to adapt to shifting market leadership—an increasingly important advantage in today’s rapidly evolving regime.
