As Tech Stocks Soar, Concentration Risk Grows
As Tech Stocks Soar, Concentration Risk Grows
As tech stocks soar on the AI revolution, many executives and early employees find their wealth overwhelmingly concentrated in a single company’s shares. That concentration can feel rewarding during a bull run, yet it quietly amplifies risk if sentiment shifts, regulation bites, or innovation leadership changes. Instead of selling and triggering large tax bills, more insiders are exploring exchange funds as a sophisticated diversification tool.
How Exchange Funds Help Executives Diversify
Exchange funds pool large positions from many shareholders, swapping an individual stock stake for an interest in a professionally managed basket. Over time, participants receive a mix of securities, spreading exposure beyond one employer while deferring capital gains taxes. This strategy can complement 10b5-1 plans, options exercises, and traditional portfolio rebalancing. Still, exchange funds have long lockup periods, fees, and accreditation requirements, so careful due diligence and coordinated tax, legal, and financial planning are essential.
