As the bull market in U.S. stocks hits new highs, some investors are searching for ways to pare their exposure to the small group of technology and communications stocks that has fueled market gains for years.
FILE PHOTO: Traders work at the New York Stock Exchange (NYSE) in New York, U.S., January 2, 2020. REUTERS/Bryan R Smith 13 Jan 2020 08:10PM(Updated: 13 Jan 2020 09:40PM) Share this content
NEW YORK: As the bull market in U.S. stocks hits new highs, some investors are searching for ways to pare their exposure to the small group of technology and communications stocks that has fueled market gains for years.
The market’s most crowded individual stocks are Microsoft , Amazon , Facebook , Visa and Mastercard , according to a recent analysis by research firm Bernstein incorporating factors such as institutional ownership and price momentum.
Just four stocks – Apple , Microsoft, Facebook and Amazon – generated more than 20per cent of the S&P 500’s total return last year, according to data from S&P Dow Jones Indices. Fund managers in a Bank of America Merrill Lynch report in December tagged technology stocks as the market’s “most crowded” trade.
While few see a clear reason for their run to end, some money managers worry the market’s leaders have become richly valued and overstretched, leaving them vulnerable to a sudden reversal in risk appetite.
“I think most investors… are going to be very surprised by how much risk is in their portfolios when you do get an environmental shift,” said Damien Bisserier, partner at Advanced Research Investment Solutions, a Los-Angeles based management and consulting firm managing US$13 billion in assets.
The firm has sought to reduce its exposure to potential market