Concentration risk

Concentration risk is a growing concern, as over 70% of the major mutual funds monitored by Bank of America hold significant stakes in six of the "Magnificent 7" stocks, excluding Tesla. Notably, positions in Meta, Apple, NVIDIA, Google, and Amazon have even increased since the start of the year. The potential danger arises if portfolio managers, reacting to an "idiosyncratic" event affecting one of these stocks, decide to simultaneously liquidate their holdings. Such a mass exit could trigger a sharp sell-off, amplifying market volatility and impacting the broader market.