A growing share of portfolio managers is paring back exposure to megacap technology and redistributing risk toward steadier stocks and core fixed income.
The rethink follows a stretch in which market leadership grew increasingly concentrated, leaving balanced portfolios vulnerable to a single factor: the fortunes of a few platform companies.
While no broad rush to the exits is evident, practitioners describe a deliberate trim in winners and a move to names that can carry earnings without demanding flawless execution.
With benchmarks heavy in fast-growing software, chips, and platforms, concentration risk has become a line-item in investment committees.
The conversation sharpened after the Nasdaq hits new all-time high, which amplified the payoff from staying long but also the drawdown potential if sentiment cools.
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North of the border, the TSX stalls near a record has underscored how cyclical and rate-sensitive pockets can lag even as headline indices look firm.
In practice, the pivot favors lower volatility equities with resilient cash generation and more predictable pricing power.
Managers point to consumer staples and health care, but also to select industrials and essential infrastructure where order books look durable and balance sheets can fund dividends and buybacks.
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For income sleeves, some are revisiting broad baskets of dividend stocks that kept pace in choppy periods and can compound without relying on multiple expansion.
Bonds are back in the conversation as more than ballast, the emphasis is on quality and duration discipline.
Intermediate Treasuries and investment-grade corporates are being used to rebuild carry and dampen equity volatility, while leaving room to add spread risk if the cycle stabilizes. The incremental change is not an all-clear on rates or inflation.
It is a recognition that with coupons reasserting their role, core fixed income can again hedge equities and contribute meaningfully to total return.
Managers say the optionality of dry powder is worth more when cross-currents are strong.
That is where a simple 25/75 framing comes in: 25 percent of a risk budget in cash and short-term instruments, 75 percent in growth-oriented assets. It is not a rule or a template for every investor.
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It is a way to stage liquidity for buy-the-dip opportunities, while keeping most of the portfolio compounding in equities and credit.
How a 25/75 bucket would work
The 25 slice is designed for near-term needs and tactical redeployment. That includes T-bills, high-yield savings, and short-duration funds.
For investors who prize automation, regular ETF cash payouts can help rebuild the bucket without forced sales. The 75 slice is where growth lives.
Inside equities, the shift is less about abandoning innovation and more about rebalancing toward diversified cash flows and pricing power.
In technology, that can mean maintaining exposure to secular trends while sizing positions so that a single earnings miss does not dominate portfolio outcomes.
In Canada, a blend of banks, pipelines, rails, and global champions from this list of Top TSX stocks is a common core.
Seasonality and headlines can still jolt positioning, september’s reputation for chop, explored here in “Why does September always destroy the stock market,” is a reminder that calendar quirks and positioning can interact in unpredictable ways. That is another reason cash feels valuable.
It offers a simple buffer against forced selling and a ready source of funds when valuations reset.
Trimming outlier winners, adding steady cash generators, rebuilding bond ballast, and keeping a defined cash sleeve can improve the odds of staying invested through the next squall.
If leadership broadens again, a diversified 75 side should participate. If leadership narrows or stumbles, the 25 side provides patience and flexibility.
