Much has been written and spoken about the increasing concentration of the Australian stock market indices and with it the concentration of the Australian funds management industry. With this concentration the dominance of the 10 largest managers over the Australian market is unprecedented.
The majority of the market beta is now being generated by a few sectors and the inexorable rise of index and quasi-index strategies (managed funds & ETF’s) is exacerbating this phenomenon.
Below is a recording of Ellerston Capital’s Paul Drzewucki’s presentation at the recent Portfolio Construction Forum. This presentation explores how index concentration and structural inefficiency in the Australian equity market and its participants create exploitable opportunities for alpha generation.