Index-tracking funds may deliver more risk than investors bargained for

Index-tracking funds are facing unprecedented concentration risk due to enthusiasm over AI-related stocks, according to a report. The first index fund, launched by Vanguard in 1976, raised just US$11 million at its launch but now holds around US$1.7 trillion in assets, while Vanguard's total assets have grown to US$12 trillion, second to BlackRock.

Index-tracking funds may deliver more risk than investors bargained for Concentration risk in indices is at the highest level, thanks to enthusiasm over all things AI-related INDEX-TRACKING funds are now so ubiquitous that it’s hard to imagine that when the late Jack Bogle of Vanguard rolled out the first such fund 50 years ago in 1976 https://www.businesstimes.com.sg/wealth/wealth-investing/index-fund-industry-behind-one-of-the-greatest-financial-revolutions-of-the-last-50-years , the fund was ridiculed as “un-American” and a “sure path to mediocrity”. Vanguard’s first fund, the First Index Investment Trust tracking the S&P 500, is now called the Vanguard 500 Index Fund. It raised just US$11 million at its launch; today, it has a total of around US$1.7 trillion in assets. Despite the inauspicious start, indexing has helped to catapult Vanguard into the ranks of fund giants, with a total of US$12 trillion in assets, second to BlackRock. TRENDING NOW /pulse?ref=trending-now Shipbuilder Penguin International wins first prime contract with Singapore Navy New Woodlands Gateway industrial hub takes shape as RTS Link nears completion Tepid investor interest a dampener on Vietnam’s strong IPO pipeline Air India seeking US$1.5 billion from owners Tata, Singapore Airlines: sources