Six money managers warn of hidden market risks, pitch fix

His firm has cut back some equity risk overweight while remaining marginally overweight. They rotated from mega-cap tech into ordinary U.S. stocks by shifting from market-cap-weighted exposures to equal-weight ones.

Charlie Ambler, co-CIO at Saltus, said the biggest risk is a policy bind around interest rates. Central banks are struggling to control long-term rates just as the economy absorbs a massive AI infrastructure buildout that is capital-hungry and inflationary, he said. Raising short-term rates, the usual fix, has become harder to pull, leaving policymakers with "an uncomfortable trade-off" between controlling inflation and maintaining financial stability.

Ambler said his team is "broadening out" – widening exposures across equities, fixed income and alternatives, particularly assets whose returns do not simply track equity and bond markets.

Steve Brice, global CIO at Standard Chartered, said the biggest cyclical risk is a disruption to the global AI boom. The biggest structural risk is the fiscal and inflation outlook. He warned against a "barbell approach" that piles into growth while holding excessive cash. The latter is "sub-optimal" because purchasing power gets eroded, he said. His team favors more diversified allocation toward developed-market financials, euro-area industrials, bonds, gold and other alternatives.

Billy Leung, investment strategist at Global X ETFs, said markets are running "two live risk debates in parallel." On the acute side, the Strait of Hormuz situation means the geopolitical premium in oil is not going away. The more durable risk sits with AI capital expenditure.

"The scale of financing now being committed to AI infrastructure build-out, well into the hundreds of billions, is reviving a genuine debate about circular financing structures and weak free cash flow conversion across parts of the AI ecosystem. That is the risk with the longer tail, because unlike a geopolitical shock, it does not resolve on a single headline," he said.

Positioning data, Leung said, shows equity investors are not taking a particularly defensive stance despite bouts of volatility. "Implied volatility across major indices and ETFs has been drifting down toward one-year lows, and skew is sitting near the bottom of its range, which points to broad-based bullishness rather than fear," he said.

The trigger most likely to force a real repositioning, Leung said, is AI capital spending durability, not macro data. A debate about whether AI investment is crowding out other capex and whether financing structures can support free cash flow gaps is legitimate, he said. If that debate moves from theory into corporate guidance or financing costs, capital would rotate away from pure infrastructure plays toward names with nearer-term monetization, he said.

Seager-Scott's firm has already made that trade: less mega-cap tech, more equal-weight exposure. Ambler's team has added alternatives that do not move with equities and bonds. Rush's firm bought REITs and emerging markets. The consensus across all six – even with different views on the biggest threat – was a single portfolio rule: do not bet the house on last year's winners.