Lukas Ahnert, Senior Product Strategist for Xtrackers, joins Margareta Hricova and Deboah Fuhr on ETF TV to share insights on market performance and managing risk on ETF TV 
The key points of the discussion are:
– Artificial Intelligence (AI) is a major driver of performance in the US market, with a small group of companies, the “Magnificent Seven” or “Great Eight,” leading the way in translating AI technology into earnings growth.
– The S&P 500 has become concentrated, with the top ten companies making up over 30% of the index, which has implications for index-based investors, including idiosyncratic risks.
– To address these risks, investors are adopting strategies like equal weighting, which allocates evenly across all constituents of the S&P 500, leading to a more balanced sector allocation and reduced concentration risks.
– Another strategy is investing in the AI theme broadly to capture the benefits while avoiding single-name risks associated with large market cap companies.
– For global equity investors, the current market dynamics mean an outperformance of larger companies and certain sectors, resulting in a 70% US and 30% ex-US allocation in global equities.
– World ex-US is seen as a valuable component for constructing investment portfolios in 2024, offering a straightforward approach to balance US allocations and allowing more involvement in index selection.
The conversation emphasizes the importance of managing concentration risks and diversifying investment strategies in response to the evolving market landscape.

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