Equity market concentration: Rising risk as trends change over time

The lesson from history is that passive investing in markets leads to concentrations in expensive areas just before those areas suffer. That is alarming if we consider how passive portfolios have evolved since the Global Financial Crisis. Over the past decade, a static investment strategy has been anything but static. In fact, as markets have become more heavily concentrated in the US, in giant companies and in technology shares, investment strategy weightings have shifted too. Today, these weightings overwhelmingly favour the winners of the last decade. Getting here has been rewardin...