XLSR - Large-Cap Growth: Managing Risk And Seeking Consistent Returns
2024-05-07 11:15:00 ET
Summary
- Passive funds do not have the ability to actively address the risks associated with their growing exposure to these prominent constituents as market concentration increases.
- Large-cap passive funds have become top-heavy, with their growing exposure to the largest index constituents moving in tandem, systematically allocating escalating weights to stocks with the highest market capitalizations in accordance with their respective indices.
- Passive investors are increasingly reliant on the future success of a limited group of companies.
Due to increasing index concentration in the market, passive funds do not have the ability to actively address the risks associated with their disproportionate exposure to the largest index constituents and are essentially betting on the future success of a limited group of companies.
William Blair’s Large Cap Growth strategy’s disciplined focus on risk management combines a meticulous portfolio-construction process that seeks to guard against unintended risks in an evolving market landscape. The portfolio does not take outsized factor or macro bets, but rather is constructed so that idiosyncratic risk at the stock level is the main driver of performance....
Large-Cap Growth: Managing Risk And Seeking Consistent Returns