Thomas Verghese

Apr 26, 2024 | advisorperspectives.com | Xi Liu |Matt Lundberg |Thomas Verghese

Key PointsAs a result of soaring valuations, tech leviathans now account for historically extreme levels of concentration in cap-weighted indices. Concentration risk highlights the vulnerability of cap-weighted indices to short-term volatility and irrationality. Equal-weight indices offer broad-market exposure to mitigate concentration risks but design flaws limit their potential.