ROOT
Chasing trendy assets can leave you vulnerable to concentration risk
Trading what’s trending might not be the best play right now.
Chasing trendy assets can leave you vulnerable to concentration risk
While apps like Robin Hood and Superhero have made retail investing easier than ever, those looking to jump on the bandwagon of big-time stocks may want to think before they act.
Speaking to nestegg, Talaria Capital co-CIO Chad Padowitz said that the decades-long growth of stock markets and the rise of influencers had led many Australians to invest in US tech stocks and passive ETFs.
“For years, this has been a winning approach as share prices have soared,” he said.
However, Mr Padowitz warned that many of these hyped assets are arguably overvalued. While uncertainty remains high, he warned that investors who are overexposed to trendy assets could quickly find themselves in a bind.

“The largest danger of following widespread trends like US tech and passive ETFs is that many investors end up trading and owning the same popular assets.”
Pointing to the 2007 Quant Quake, Mr Padowitz warned investors to stay wary of concentration risk.
“This not only inflates asset valuations; it means if a market downturn occurs, more investors could suddenly find themselves caught in a congested race for the exit,” he explained.
According to him, overexposure is a double-edged sword.
While relying on trending assets to grow your portfolio may seem like a winning strategy in the short term, Mr Padowitz warned that markets are not linear. Market corrections are eventually going to happen, and they’re usually a surprise when they do.
“Too many Australian investors are preoccupied with guessing what will happen in the market, while not enough are building resilient portfolios to withstand volatile periods,” he said.
Rather than ask whether it will rain today, investors should be thinking about whether they have an umbrella ready if it does.
“Buying and holding trending assets isn’t a danger on its own, but it’s critical that these assets are balanced within a wider portfolio that offsets risk and is built to withstand volatility,” Mr Padowitz suggested.
His recommendation? Australians need to learn to look beyond trends and embrace more rigid investment principles if they want to build a line of defence around their portfolio.
One such principle is learning to properly diversify your holdings.
“Diversification enables investors to hold true to their convictions and generate consistent returns while spreading risk across markets, sectors and asset classes,” Mr Padowitz said.
While avoiding trending assets outright isn’t recommended, he advocated for investors to undertake “fundamental bottom-up research” into companies before adding them to their portfolios.
He emphasised the importance of broadening your investment scope to include consistent income in addition to share price growth.
“By focusing on these principles, investors can build a portfolio that helps protect and reward them through any storm,” Mr Padowitz said.
About the author

About the author


Invest
Australia’s 5% deposit guarantee accelerates: relief for buyers, reckoning for lenders
Bringing forward Australia’s expanded 5% deposit guarantee to 1 October 2025 changes the mechanics of first-home finance and the economics of mortgage risk overnight. By removing income caps and place ...Read more

Invest
Australia's performance test shake-up is rewriting the investment playbook
Australia’s performance test has been a powerful accountability tool—exposing laggards and accelerating consolidation. But industry bodies now back targeted reforms to stop the test from ...Read more

Invest
Financial Basics Community Foundation receives major grant to boost financial literacy for disadvantaged youth
In a significant step toward enhancing financial literacy among disadvantaged young Australians, the Financial Basics Community Foundation (FBCF) has secured a substantial grant from the MetLife ...Read more

Invest
Dynamoney appoints Brett Thomas as CEO to spearhead growth and innovation
Dynamoney, a prominent player in the commercial finance sector for Australian small and medium enterprises (SMEs), has announced the appointment of Brett Thomas as its new Chief Executive OfficerRead more

Invest
Brokers’ wishlist, nation’s payoff: approvals, tax and AI as the new housing‑finance flywheel
Mortgage brokers aren’t just pleading sectoral special interests. Their asks—faster planning approvals, targeted tax recalibration and scaled AI—are levers to lift national productivity, unlock ...Read more

Invest
Waikiki's wave of opportunity how investors are surfing growth and risk in Perth's southern shores
Waikiki, a coastal suburb in Perth’s south, is drawing capital for the rare mix of affordability, rental tightness and billion‑dollar defence‑led infrastructure nearby. Yet the market is not one‑way ...Read more

Invest
State Street Investment Management holds steady on ETF model portfolio allocations
State Street Investment Management has maintained its asset allocation for its Risk-Based and Target Income ETF Model Portfolios despite market volatility and adjustments by other major players in the ...Read more

Invest
State Street Global Advisors rebrands as State Street Investment Management
State Street Global Advisors has rebranded as State Street Investment Management as the world's fourth-largest asset manager seeks to reflect its growth strategy and strengthen client partnerships. Read more

Invest
Australia’s 5% deposit guarantee accelerates: relief for buyers, reckoning for lenders
Bringing forward Australia’s expanded 5% deposit guarantee to 1 October 2025 changes the mechanics of first-home finance and the economics of mortgage risk overnight. By removing income caps and place ...Read more

Invest
Australia's performance test shake-up is rewriting the investment playbook
Australia’s performance test has been a powerful accountability tool—exposing laggards and accelerating consolidation. But industry bodies now back targeted reforms to stop the test from ...Read more

Invest
Financial Basics Community Foundation receives major grant to boost financial literacy for disadvantaged youth
In a significant step toward enhancing financial literacy among disadvantaged young Australians, the Financial Basics Community Foundation (FBCF) has secured a substantial grant from the MetLife ...Read more

Invest
Dynamoney appoints Brett Thomas as CEO to spearhead growth and innovation
Dynamoney, a prominent player in the commercial finance sector for Australian small and medium enterprises (SMEs), has announced the appointment of Brett Thomas as its new Chief Executive OfficerRead more

Invest
Brokers’ wishlist, nation’s payoff: approvals, tax and AI as the new housing‑finance flywheel
Mortgage brokers aren’t just pleading sectoral special interests. Their asks—faster planning approvals, targeted tax recalibration and scaled AI—are levers to lift national productivity, unlock ...Read more

Invest
Waikiki's wave of opportunity how investors are surfing growth and risk in Perth's southern shores
Waikiki, a coastal suburb in Perth’s south, is drawing capital for the rare mix of affordability, rental tightness and billion‑dollar defence‑led infrastructure nearby. Yet the market is not one‑way ...Read more

Invest
State Street Investment Management holds steady on ETF model portfolio allocations
State Street Investment Management has maintained its asset allocation for its Risk-Based and Target Income ETF Model Portfolios despite market volatility and adjustments by other major players in the ...Read more

Invest
State Street Global Advisors rebrands as State Street Investment Management
State Street Global Advisors has rebranded as State Street Investment Management as the world's fourth-largest asset manager seeks to reflect its growth strategy and strengthen client partnerships. Read more