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August 7, 2025

Concentration risk

This chart says it all. If you invest 100 USD in an ETF tracking the S&P 500 today, 15 USD are allocated to just two stocks: Microsoft and NVIDIA. Meanwhile, only 19.7 USD go to all defensive sectors combined — consumer staples, healthcare, energy, and utilities.

At European Capital Partners, we call this what it is: concentration risk. It reflects not just market momentum but also passive capital flows chasing the same few names. When entire sectors are underrepresented while a handful of companies dominate, the margin for error shrinks.

Our approach? We look past index weightings and focus on businesses with undervalued earning power, not headline dominance.

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