Stock market indices: How big is the cluster risk?

Article by Simon Landt

Every day we come across products from Microsoft, Apple, Amazon, Meta (including Facebook, Instagram and WhatsApp), NVIDIA and Alphabet (Google). However, US companies also play a prominent role in many securities portfolios due to their high market capitalization. They are either directly included in the portfolio as individual stocks or are prominently represented in equity funds. For example, Microsoft's portfolio weighting in the MSCI World is around 4.4 percent - a considerable weighting for an index made up of 1,465 individual stocks. 

In this issue of Economic Situation and Strategy, you can find out how high the cluster risk is for popular stock market indices and how you can take countermeasures: