Mon, Feb 18, 2019
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. New Launches: Royal London launches new Greetham fund, Direct lending specialist unveils multi-manager credit fund, PeakSpan Capital announces final close for Fund II on $265m, Mubadala's venture capital unit to launch $400m European fund, Lazard offers Scandinavian bond fund[more]

    Royal London launches new Greetham fund From FT Adviser: Royal London's Multi Asset Strategies is the latest fund to be launched for Trevor Greetham and his eight-strong multi-asset team. It targets annualised total returns of cash, defined as the Sterling Overnight Index Average, p

  2. New Launches: AI venture capital firm InReach Ventures launches new $60m fund[more]

    From Telegraph: InReach Ventures, a venture capital firm using artificial intelligence to spot the most promising early stage startups in Europe, has closed a new EUR53m ($60m) fund, as it said the Brexit process would be unlikely to decrease entrepreneurship in the EU. InReach Ventures said it

  3. Outlook: Why Paul Tudor Jones fears a 'revolution', A lot of 'negative surprises' will hit the markets in coming months, hedge-fund veteran Mark Yusko says[more]

    Why Paul Tudor Jones fears a 'revolution' From Institutional Investor: Billionaire hedge fund manager Paul Tudor Jones; Robert Shiller, the Yale University professor who is a co-winner of the Nobel Prize in economic sciences; and DoubleLine Capital's deputy chief investment officer Jeff

  4. Opalesque Exclusive: UK hedge funds to prepare their senior managers for new regulatory regime[more]

    B. G., Opalesque Geneva: Sani Jackson, London-based director at Optima Partners, a global regulatory compliance and risk management firm, warns UK-based fund managers of some (non-Brexit related) regulatory issues they cannot ignore this y

  5. Opalesque Exclusive: BDO Survey: 89% of GPs expect a downturn within the next two years[more]

    Bailey McCann, Opalesque New York: Private equity appears to be preparing for the worst. 89 percent of private equity fund managers expect a prolonged downturn sometime in the next two years, according to the findings of a newly released survey from BDO. The trade war was cited as a top conce