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Tech stock shocks test concentration risk for ETF investors

Even deliberately diffuse funds can still be caught by overexposure to once-fashionable companies

Stock market falls amid fears of global recession, rising inflation and higher interest rates have made 2022 a miserable year for many investors.

And exchange traded funds skewed towards disruptive, high-growth companies have been particularly hard hit.

Fans of Cathie Wood need no reminding that her flagship Ark Innovation ETF now sits on a paper loss of 64 per cent for the 12 months to 28 September, in US dollar terms. Another growth play, the KraneShares CSI China Internet UCITS ETF, has been heavily exposed to the share price woes of Alibaba and Tencent, pushing it to a loss of 43 per cent for the 12 months to 28 September.

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