Benchmarks laden with blue-chip stocks

Index tracking is not proving such a safe option in creating a diversified portfolio, with large weightings in major economies creating bias towards particular sectors

Index concentration in major economies diminishes portfolio diversification at stock and sector level and poses a hazard for benchmark constrained managers, Fidelity research has claimed. The top 10 names in the FTSE All-Share, which include BP at 8.03%, GlaxoSmithKline at 4.87% and HBOS at 2.21%, now account for more than 40% of the entire index. In Germany and France, the figures are even higher, with the top 10 firms in the German HDAX, varying in size from 3% to 9%, accounting for 54.3% of the total and those in the French CAC 40, which make up between 3% and 13.7% of the index, acco...