Given that the S&P 500 is continuing to approach new all-time highs, it should not come as a particular surprise that some advisors and investors are trying to better understand where equity valuations are sitting. Are valuations getting far too high, or are conditions simply continuing to work in favor of U.S. companies?
The 2026 Outlook from the experts at BNY Investments evaluated how equity valuations should be viewed at this time. In the outlook, Alicia Levine, Head of Investment Strategy & Equities at BNY Wealth, and John Porter, Chief Investment Officer at BNY Investments Newton, noted that while equity valuations remain high, this is reflective of stronger fundamentals, not overvaluation.
“Economic and earnings growth remain resilient, with global earnings revisions trending higher and profitability broadening beyond big tech,” the BNY outlook noted. “Rising productivity and ongoing AI adoption should further reinforce record-level margins and long-term earnings growth.”
Part of the strong valuations for the S&P 500 are coming from the tech sector. As Levine and Porter pointed, the tech sector holds a higher price-to-earnings ratio than the S&P 500 itself, thus boosting the index in return.
Strength in the tech sector is certainly a big part of the story, but the outlook noted that earnings growth is now broadening out across different sectors and regions. This includes U.S. small-caps, along with international equities in Japan and Europe. This kind of market can benefit an advisor or investor who is remaining engaged in an active and diversified manner.
Tackle Large-Cap Valuations With a Concentrated Approach
The BNY Concentrated Growth ETF (BKCG ) can help portfolios tap into the opportunities in the S&P 500 in a more nuanced manner. BKCG is an active fund from the BNY Investments team that invests in a tight portfolio of large-cap securities.
Using fundamental analysis, BKCG’s portfolio team looks to pick 25–35 companies and employ a buy-and-hold strategy. This consecrated portfolio lets BKCG’s stock picking and the strength of its individual securities drive returns, more so than the broader momentum of the S&P 500.
BKCG’s approach to large-cap securities offered compelling results for its investors last year. Year-to-date, BKCG’s NAV rose 14.58%, as of December 31, 2025.
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