Wed, Nov 21, 2018
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Alternative Market Briefing

TOBAM: risk concentration levels on US equities hitting 2008 levels

Monday, July 02, 2018

Bailey McCann, Opalesque New York:

A new analysis of US equities from French asset manager TOBAM suggests that risk concentrations are hitting levels not seen since 2008.

Driven by a small number of actors the so-called "FAANG stocks" - a group of mega tech stocks that have delivered significant relative outperformance amongst the MSCI US index, TOBAM says this growth is potentially dangerous for investors as high sector concentrations in equity markets translate into low levels of portfolio diversification..

"Fundamentally, market cap weighted portfolios are not diverse portfolios," says Christophe Roehri, global head of business development at TOBAM in an interview. "The influence of FAANG stocks in the index is outsized and investors may not be aware of just how concentrated their portfolios have become."

The potential risks are most prevalent in passive portfolios which are now extremely vulnerable to market corrections, Roehri says. But, the trend is similar in actively managed portfolios if managers have been riding the rally in the FAANGs.

"We are seeing a unique trend in the market," Roehri explains. "While equity market correlations have started to go down broadly over the past 18 months, they are actually going up for the FAANG stocks. So, while it may have been good to be exposed to these names it's time to start looking elsewhere or at least increase diversification."

Warning signs are ......................

To view our full article Click here

Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing


  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. PG&E: Are these hedge funds still holding PG&E stock?, PG&E rout may be hitting hedge funds after raised bets before fire[more]

    Are these hedge funds still holding PG&E stock? Frm Barrons: Hedge funds that bet big on PG&E (PCG) might have bitten off more than they can chew. Regulatory filings show that a number of hedge funds including Baupost Group, Viking Global Investors, and BlueMountain Capital were PG&E stoc

  2. GE: Several high-profile funds raised stakes in GE before selloff, GE credit crunch ripples across Wall Street, GE's tumbling bonds are highlighting a bigger problem at the fallen giant, After GE, investors are watching these debt-laden companies[more]

    Several high-profile funds raised stakes in GE before selloff From Reuters: Several prominent investors raised their stakes in General Electric Co (GE.N) in the third quarter, before its shares sank in recent weeks, filings with the U.S. Securities and Exchange Commission showed on Wedne

  3. Tax: Offshore hedge funds to be targeted by new IRS rules coming soon, Technology investors fear regulators' net, Rich investors eye tax-favored development funds[more]

    Offshore hedge funds to be targeted by new IRS rules coming soon From Bloomberg: The Internal Revenue Service is close to releasing a proposal that would narrow the U.S. tax benefits for offshore hedge funds, an agency official said. The proposed regulations will address a change in

  4. U.S.: Hedge funds' historic bond bet swing suggests Fed close to cycle end, Goldman Sachs believes the US economy will slow to a crawl next year[more]

    Hedge funds' historic bond bet swing suggests Fed close to cycle end From Reuters: A potentially huge shift is underway in the U.S. bond market, underscored by a historic swing in hedge fund positions: investors are beginning to think the U.S. economy is close to peaking and the Fed is ne

  5. New Launches: Hedge fund Solus looks to raise $750 mln fund, Jupiter launches absolute return fund of funds for German clients, RED Capital Partners launches $57.13m fund to invest in European tech companies founded by women, GLP unveils new continental European fund, Portfolio Advisors closes ninth FoF on $1.2bn, NN IP launches European Sustainable Infrastructure Debt fund[more]

    Hedge fund Solus looks to raise $750 mln fund From Reuters: Solus Alternative Asset Management LP is launching a $750 million fund focused on distressed and stressed investment opportunities, according to a person familiar with the matter and a letter to investors Reuters reviewed. Th