Key Takeaways
- • Over 500 asset owners surveyed by Morningstar (covering $20+ trillion in assets) identified AI-driven valuations, market concentration, and dependence on mega technology providers as their three largest portfolio risks—yet increased exposure to these exact risks during the past year.
- • US equity allocations reversed sharply: 31% of asset owners increased US exposure in 2026 versus 23% the prior year, while only 24% reduced exposure compared to 32% previously, despite 51% citing Trump administration concerns and 34% citing regulatory uncertainty.
- • Benchmark weightings, rather than fundamental conviction, are driving the increased concentration risk exposure—institutions are passively following index allocations rather than making active judgments about asset valuations or concentration levels.
- • Morningstar's fifth Asset Owner Perspectives Survey (published September 16, 2026) captured responses from pension funds, insurance general accounts, outsourced CIOs, and family offices across 11 countries in North America, Europe, and Asia-Pacific.
Summary
Asset owners face a paradox documented in Morningstar's latest Asset Owner Perspectives Survey: they have identified their most significant portfolio risk with unusual clarity, yet are actively increasing exposure to it. The survey, covering more than 500 institutions managing over $20 trillion in combined assets across pension funds, insurance general accounts, outsourced CIOs, and family offices in 11 countries, reveals a disconnect between stated concerns and capital deployment.
The three risks cited most frequently by respondents are interconnected: the compounding effect of elevated valuations and capital expenditure in artificial intelligence, dangerous market concentration, and systemic dependence on a handful of mega technology providers. These concerns rank at the top of asset owner risk registers. However, when asked about their actual allocation decisions over the past 12 months, respondents reported substantially increasing their exposure to exactly these concentrated positions.
The most striking evidence emerges in US equity allocations. In the prior year, 32% of asset owners reduced US exposure while 23% increased it. This year, the figures have nearly inverted: 31% increased US exposure while 24% decreased it. This reallocation occurred despite material headwinds. Fifty-one percent of respondents cited concerns about the Trump administration, 34% cited regulatory uncertainty, and 30% cited global conflict risks. These concerns did not deter increased allocations; Morningstar attributes the shift to three factors: market resilience, AI-driven growth narratives, and benchmark weightings.
The role of benchmark weightings merits particular scrutiny. Index-driven allocations represent an absence of active judgment rather than a positive conviction about valuations or concentration risk. Institutions that increase US exposure because the S&P 500 or similar benchmarks demand it are not making a deliberate assessment of American asset attractiveness; they are outsourcing the decision to passive weighting methodologies. This dynamic creates a self-reinforcing cycle in which concentration deepens precisely because it is embedded in widely-used benchmarks, not because fundamentals justify increased exposure to mega-cap technology stocks or the AI infrastructure they dominate.
The three risks cited most frequently by respondents are interconnected: the compounding effect of elevated valuations and capital expenditure in artificial intelligence, dangerous market concentration, and systemic dependence on a handful of mega technology providers. These concerns rank at the top of asset owner risk registers. However, when asked about their actual allocation decisions over the past 12 months, respondents reported substantially increasing their exposure to exactly these concentrated positions.
The most striking evidence emerges in US equity allocations. In the prior year, 32% of asset owners reduced US exposure while 23% increased it. This year, the figures have nearly inverted: 31% increased US exposure while 24% decreased it. This reallocation occurred despite material headwinds. Fifty-one percent of respondents cited concerns about the Trump administration, 34% cited regulatory uncertainty, and 30% cited global conflict risks. These concerns did not deter increased allocations; Morningstar attributes the shift to three factors: market resilience, AI-driven growth narratives, and benchmark weightings.
The role of benchmark weightings merits particular scrutiny. Index-driven allocations represent an absence of active judgment rather than a positive conviction about valuations or concentration risk. Institutions that increase US exposure because the S&P 500 or similar benchmarks demand it are not making a deliberate assessment of American asset attractiveness; they are outsourcing the decision to passive weighting methodologies. This dynamic creates a self-reinforcing cycle in which concentration deepens precisely because it is embedded in widely-used benchmarks, not because fundamentals justify increased exposure to mega-cap technology stocks or the AI infrastructure they dominate.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.