Big Companies Are Likely to Get Bigger—What Could That Mean for Your Portfolio?

_{¹ Source: Bloomberg, data as of July 2020.}

_{² Grullon, G., Larkin, Y., and Michaely, R. “Are U.S. Industries Becoming More Concentrated?” Oxford Review of Finance, April 2019.}

_{Information is as of 08/04/2020.}

_{Opinions are those of the author(s), as of the date of this document and are subject to change.}

_{Investing involves risk including possible loss of principal.}

_{Past performance is no guarantee of future results.}

_{Asset allocation, diversification and rebalancing do not ensure a profit or protect against loss in declining markets.}

_{The Chief Investment Office (CIO) provides thought leadership on wealth management, investment strategy and global markets; portfolio management solutions; due diligence; and solutions oversight and data analytics. CIO viewpoints are developed for Bank of America Private Bank, a division of Bank of America, N.A., (“Bank of America”) and Merrill Lynch, Pierce, Fenner & Smith Incorporated (“MLPF&S” or “Merrill”), a registered broker-dealer, registered investment adviser and a wholly owned subsidiary of Bank of America Corporation.}

_{Investments in a certain industry or sector may pose additional risk due to lack of diversification and sector concentration.}

_{Equity securities are subject to stock market fluctuations that occur in response to economic and business developments.}

_{Stocks of small- and mid-cap companies pose special risks, including possible illiquidity and greater price volatility than stocks of larger, more established companies.}

_{Investing in growth stocks incurs the possibility of losses because their prices are sensitive to changes in current or expected earnings. Value stocks are securities of companies that may have experienced adverse business or industry developments or may be subject to special risks that have caused the stocks to be out of favor. If the manager’s assessment of a company’s prospects is wrong, the price of its stock may not approach the value the manager has placed on it.}

_{Investments in foreign securities (including ADRs) involve special risks, including foreign currency risk and the possibility of substantial volatility due to adverse political, economic or other developments. These risks are magnified for investments made in emerging markets.}

_{Impact investing and/or Environmental, Social and Governance (ESG) managers may take into consideration factors beyond traditional financial information to select securities, which could result in relative investment performance deviating from other strategies or broad market benchmarks, depending on whether such sectors or investments are in or out of favor in the market. Further, ESG strategies may rely on certain values based criteria to eliminate exposures found in similar strategies or broad market benchmarks, which could also result in relative investment performance deviating.}