Is Shell the new Apple? Concentration risk looms for UK equity investors

Concentration risk: Is Shell the new Apple?

Royal Dutch Shell's planned acquisition of BG Group is set to cause UK equity managers headaches as they struggle to avoid concentration risk.

The £47bn deal, announced by both companies last week, will give the country's largest listed company a market cap in excess of £200bn should it go through at the end of this year, raising concerns over its dominance of the UK market. Richard Marwood, who holds 3.7% of his £1.1bn AXA Distribution fund in Shell shares, said: "Shell might end up being one of those stocks where investors tend to be structurally underweight. This is definitely an issue that will come into play." Figures from Hargreaves Lansdown suggest this is already becoming a problem: fewer than 4% of UK active manager...