Investors are at risk of suffering huge losses by blindly investing in highly-concentrated equity indices, according to Invesco chief executive Martin Flanagan. According to the Financial Times, Flanagan (pictured) said relying on indices that weight stocks by market value could inflate losses if stockmarkets dip. 'Cap-weighted' indices, such as the S&P 500,...
Investors are pouring money into highly concentrated yet poorly understood " cap - weighted " equity indices , putting them at risk of huge losses if financial markets plummet , according to investment banker Martin Flanagan . Investors believe that the indices are " safe and cheap " , when in ##dices " you are coming up with a disproportionate amount of your portfolio in the biggest stocks " , said Flanagan . The 10 biggest ETFs in the US have traded in around $ 65bn in 2017 so far , with all of those cap - weighted .