Investors advised to reduce US concentration in global portfolios
Gerd Kommer argues that high US weighting in global indices creates risk multiplication rather than diversification. He suggests reducing exposure to mitigate country-specific risks, noting that innovation benefits are broadly shared.
Gerd Kommer discusses the high US weighting in global equity indices, noting that the All-Country-World index contains 64% US stocks and the MSCI World over 70%. He argues that such concentration creates "Risikomultiplikation" (risk multiplication) rather than diversification, exposing investors to country-specific black swan events. Kommer suggests that while US growth is currently driven by the AI boom, Europe suffers from growth weakness and political instability, but investors should not bet entirely on US outperformance. He cites William Northouse's research indicating that 95-98% of the long-term economic benefits of innovation accrue to society rather than the inventor, implying that AI benefits will be global. Kommer highlights that companies like ASML, Siemens, and Schneider Electric are key global players, and that chipmakers like TSMC, SK Hynix, and Samsung are critical to the AI infrastructure buildout, regardless of their home market classification. He stated, "Streuung nicht zur Diversifikation, sondern zur Risikomultiplikation."