The concentration conundrum continues: Lure of tech giants may be too great for those seeking diversification

Greater stock-specific risks abound

In a world where fund management fees are increasingly under scrutiny, we have seen a significant increase in the number of advisers choosing index strategies over active funds in a bid for lower costs and to simplify their research, due diligence and transactional workload.

As a result, many advisers are increasingly opting for global index strategies to provide cost-effective exposure to thousands of global equity holdings within multi-asset portfolios. In the previous decade, we witnessed large outperformance of US stocks which delivered a 10-year cumulative return of over 300% - far above the 110% average for the UK, Europe, Asia-Pacific and emerging markets, with much of this outperformance being driven by technology stocks. The difference in performance between US stocks compared with the rest of the world has perhaps been most stark earlier this ye...