Investors could be forgiven for thinking the highly concentrated market environment in 2021, fueled by excess liquidity and ultra-low interest rates, was behind them. However, despite a different set of macro conditions in 2023, we have seen a return of similar equity market conditions with the continued outperformance of the ‘magnificent seven’ group of stocks.
Frontier’s global equity market review and recent active management paper highlighted another disappointing year for global active managers and therefore another challenging year for relative returns for asset owner’s global equity portfolios. In this video, Senior Consultant, Brad Purkis provides a brief overview of our research paper and the trends we’ve noticed.
Frontier clients have access to the detailed research paper which examines the following:
- Global equity market concentration: An examination of concentration levels in the global equity market relative to history.
- Comparison with past periods: An examination of the similarities and differences between the current market dynamics and a previous period of high market concentration (the dotcom era), along with an exploration of whether insights gleaned from that era can be applied in the current context.
- Implications for asset owners: A discussion on why the prevailing market conditions pose challenges for asset owners.
- Portfolio construction strategies: Exploration of the levers available to asset owners for constructing portfolios that can effectively mitigate risks associated with highly concentrated market environments.
The paper is available on Partners Platform. If you are not a Frontier client but would like to know more about this research, please contact us on publications_at_frontier@frontieradvisors.com.au.
