When your best-performing holdings become so dominant that portfolio rules force you to dump them, you know the market has entered strange territory. That is exactly what happened to Sam Konrad, the investment manager for Asia Equity Income at Jupiter Asset Management.
On June 8, Konrad revealed that his fund has been compelled to sell its positions in TSMC, Samsung, and MediaTek, three of Asia’s most important semiconductor companies. The reason: the AI rally has made these stocks so large within regional benchmarks that holding them violates the portfolio concentration limits that govern actively managed funds.
The numbers behind the forced selling
The year-to-date performance of these three chipmakers tells the story. TSMC is up 52%. Samsung has surged 159%. MediaTek has climbed 184%.
TSMC, Samsung, and SK Hynix now comprise almost one-third of the MSCI Asia Pacific ex-Japan Index. In local markets, the distortion is even more extreme. TSMC alone accounts for 41.5% of Taiwan’s TAIEX index. Samsung and SK Hynix together represent 55% of South Korea’s KOSPI.
