22 January 2026
Global equity investing still offers one of the broadest opportunity sets in finance, but many of the traditional diversification benefits investors once took for granted are eroding fast. Active management and deliberate diversification have become essential in managing risks and capturing new opportunities. Here’s why it’s time to rethink global equity strategies.
As of December 2025, a handful of US mega-cap technology stocks accounted for nearly 40% of the S&P 500 and almost 30% of the MSCI World Index, while US equities represented over 70% of the latter. What was once a naturally diversified asset class has, in practice, become a highly concentrated bet on a narrow cohort of names and a single geography.
This level of concentration poses significant risk amid rising geopolitical friction, fragmented supply chains and uneven monetary policy. The dangers of overexposure are clear as demonstrated by the ‘DeepSeek Moment’ in January 2025, which triggered a sell-off in highly valued US tech stocks and demonstrated the vulnerability of highly concentrated portfolios.
This is why investors need to diversify not only across countries or sectors, but also through independent and transformative growth drivers that align with the fast-evolving global economy.
Global equity benchmarks are more concentrated than ever with the top 10 stocks in the MSCI World Index dominating performance. This extreme concentration creates significant risk for investors who rely on passive or benchmark-driven strategies.
Adding to the challenge, many global equity strategies are unintentionally crowded into the same style and factor exposures — long growth, long quality, and long low-volatility — precisely when these factors are historically expensive. Together, these dynamics underscore the need for active management and deliberate diversification to mitigate concentration risk and position portfolios for sustainable long-term returns.
In this environment, simply spreading money across 500 or 1,000 global stocks no longer delivers meaningful diversification if the economic returns are still coming from the same narrow set of winners.
Rather than accept concentration risk or retreat to cash, investors can achieve genuine diversification by focusing on a concentrated but deliberately multi-themed portfolio of best-in-class companies powering tomorrow’s economy.
The key is to maintain high conviction at the stock level while enforcing deliberate diversification across independent long-term growth themes, geographies, and stages of adoption. This approach provides three critical advantages over both traditional global funds and narrow single-theme strategies:
A well-constructed equity portfolio populated with 40-60 individual stocks can capture the highest-conviction ideas
while spreading exposure across multiple, structurally uncorrelated themes. This approach reduces concentration risk without diluting alpha, ensuring that performance is driven by stock selection rather than index weightings.
Tomorrow’s growth leaders could emerge from across the world, ranging from European industrial automation and Japanese robotics to Korean battery materials, China Taiwanese AI infrastructure, and Israeli cybersecurity. A thematic lens naturally uncovers these opportunities, while optimised portfolio construction adds resilience.
When one theme faces headwinds, others can take the lead — whether it’s a nuclear energy renaissance, biotech breakthrough, or sovereign technology build-out — creating a portfolio that adapts as market leadership evolves.
No single theme will dominate the next decade the way internet software or smartphones dominated the last two. Future returns are likely to be shared across a broader set of transformative trends such as smarter automation, lifestyle, biotech and sovereignty.
In periods of market uncertainty and volatility, there are often dislocation opportunities that active managers can exploit. This goes further than just identifying “AI adopters” and includes areas like utilities, financials, industrials, M&A activity, and shareholder value creation.
Essentially, broad equity exposure through high-conviction opportunities is a key theme to identify future leaders that sit outside today’s narrow group of dominant names.
These are the companies poised to lead transformational themes that are going to change our behaviours and define the returns of the future. AI is one example in technology that’s been well documented; other examples include new ways to address unmet medical needs in healthcare.
The world doesn’t stand still, and neither should your global equity allocation. Passive ownership of yesterday’s index or narrow bets on yesterday’s winners can deprive investors of exposure to the most powerful forces reshaping the global economy.
In an era of unprecedented concentration and geopolitical complexity, diversification isn’t just about spreading risk. It’s about capturing tomorrow’s returns wherever they emerge — finding the household names and thematic acronyms that weren’t widely known five years earlier.
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