Disciplined Rebalancing: Addressing Today's Concentration Dilemma

BMO Global Asset Management explores the challenge of extreme concentration in U.S. mega-cap technology stocks and advocates for disciplined rebalancing and equal-weight strategies to maintain diversification.

Key Takeaways

• 1.Market momentum has driven many portfolios into high concentration in a few mega-cap technology names without intentional investor choice.
• 2.Rebalancing should be viewed as a risk-management discipline to restore portfolio integrity, not as a bearish market call or prediction.
• 3.Equal-weight strategies like the BMO MSCI USA Equal Weight Index ETF (ZEQL) offer a systematic way to participate in growth while reducing concentration risk.

Table of Contents

• Disciplined rebalancing: How to address today's concentration dilemma
• Portfolios drift more than realized
• Rebalancing isn't a market prediction
• Equal-weight strategies should draw renewed attention
• The question facing allocators now