European Capital Partners reposted this
Concentration risk is a growing concern, as over 70% of the major mutual funds monitored by Bank of America hold significant stakes in six of the "Magnificent 7" stocks, excluding Tesla. Notably, positions in Meta, Apple, NVIDIA, Google, and Amazon have even increased since the start of the year. The potential danger arises if portfolio managers, reacting to an "idiosyncratic" event affecting one of these stocks, decide to simultaneously liquidate their holdings. Such a mass exit could trigger a sharp sell-off, amplifying market volatility and impacting the broader market. #equities #longterminvesting #valueinvesting #ecplu
Head of Sales & Investment Specialist at BlueBox Asset Management
3wLeon, I always wonder why a fund manager would do this. Too many benchmark huggers out there, no wonder so many investors opt for ETFs. I see UCITS tech funds holding 10% or more in NVIDIA, this makes me wonder: (1) why would anyone pay such a high management fee for this, and (2) why would a manager put their clients money at such high risk?