Key takeaways
Passive global equity benchmarks are increasingly concentrated: The U.S. now represents more than 60% of global equity market capitalization.
Allocators need to beware the potential risks of waiting for markets to rebalance, because history suggests extreme equity market concentrations can unwind in a costly manner.
Modest allocation shifts—adding active, factor-based and/or regional exposures—can reduce concentration risks while preserving overall equity policy weights.
ETFs can enable flexible, incremental shifts in portfolio allocation by offering building blocks that span passive, systematic, active and options-based strategies.