Interesting paper shared by @ValueStockGeek on portfolio concentration which I share similar thoughts.

This coincides with the rise in active funds with higher concentration investment strategies and allocators looking for them.

“Concentrated equity strategies represent a deceptively simple solution for investors who are in search of exceptional skill.”

“We find no evidence that concentrated strategies, as a group, produce higher active returns or alpha than higher-breadth strategies.”

“…concentration is not associated with outperformance after controlling for cap and style attributes based on the manager’s own characterization.”

“These results show that while discretionary stock picking ability surely exists among institutional managers, concentration is not any easy solution for investors looking to boost active performance.”

“Although we believe that there are discretionary stock pickers who possess superior selection and timing ability, our results highlight that such skill is not readily apparent among concentrated institutional equity strategies, taken as a group.”