Janus Henderson Investors' Julian McManus: Active investing in an era of market concentration

Lessons from DeepSeek shock

Markets served investors an important lesson last month: relying too heavily on consensus trades can be costly.

The release of Chinese AI startup DeepSeek's R1 model – an advanced artificial intelligence system that promises more efficiency and cost-effectiveness compared to traditional AI models – caused a stock market shock, wiping almost $600bn from Nvidia's market cap in one day, as investors scrambled to understand its implications. The dominance of the Magnificent Seven stocks, with Nvidia at the forefront, has created a landscape where many investors have grown dependent on a handful of names. Yet the recent dislocation we have seen in markets underscores why active investing - diversif...