The U.S. made up 65% of the MSCI ACWI and the Magnificent 7 made up 33% of the S&P 500 Index as of June 2024. Most investors have a concentration problem in their equity exposure.
Key takeaways
- The Mag 7 were down 40% in 2022 and up 76% in 2023—holding them is risky, and not holding them is risky. What’s an investor to do?
- We explore three ways to manage concentration risk: hold less U.S. large cap, hold U.S large cap but not capitalization weighted, or hold U.S. large cap and buy protection.
- Each one of these broad approaches has multiple variations that investors can take to lower their concentration risk.
- Which is right for you?