The most crowded trade

According to the April Fund Manager Survey from BofA, the “long big tech” trade is by far the most crowded trade amongst institutional fund managers. This happens in a context where the stock market is currently driven by only a few winners ( FAANGS) and where higher interest rates should challenge the high valuations of some big tech companies. Arguably, the recent quarterly results shown by the big tech stocks demonstrate their defensive qualities in terms of earnings. From our perspective at ECP, we believe however that in the long term valuations matter and overcrowded trades are by nature the most fragile trades. Our portfolios are positioned accordingly.