Sat, Jul 21, 2018
A A A
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. Northern Trust combines private equity and hedge fund admin units[more]

    From GlobalCustodian: Northern Trust has merged its private equity and hedge fund administration businesses to create a new North America Alternative Fund Services unit. The new division will provide fund administration, accounting and data solutions to its global hedge funds, private equity manager

  2. 7 ETFs that act like a hedge fund[more]

    From US News: To say 2018 has been volatile for investors borders on understatement. The first quarter saw the CBOE Volatility Index spike. Stocks churned in Q2 as the Federal Reserve raised rates again and signaled continued tightening to come. And the third quarter is off to a choppy start, thanks

  3. Investing - Hedge funds circle around debt-binge firms, Hedge funds pin macro hopes more on U.S. yield[more]

    Hedge funds circle around debt-binge firms From Bloomberg.com: Hedge funds and private equity firms are positioning to profit from the collapse of companies in Europe that have binged on debt. Investors have built up their distressed debt businesses by the most in at least two years in t

  4. Funds of hedge funds are opening at a record pace in China[more]

    From Bloomberg: An investment offering that most of the world has shunned is suddenly all the rage in China, and money managers from UBS Group AG to SkyBridge Capital are moving to grab a slice of the bounty. Funds of hedge funds, which allocate client money across multiple managers, are opening

  5. Preqin: Hedge funds take a dip in June[more]

    From AI-CIO.com: Hedge funds tripped again in June, recording the asset class' third negative month, as gauged by the 2018 Preqin All-Strategies Hedge Fund benchmark. June saw a 0.5% loss for the benchmark, giving the standard its worst start to a year in more than a decade. That benchmark is barely