Cognitive dissonance in Taiwan vs China allocations
The guest argued that global fund managers exhibit severe cognitive dissonance by labeling China uninvestable due to geopolitical risks while simultaneously holding massive, concentrated positions in Taiwan-based TSMC.
The argument
The speaker pointed out that 93% of long-only funds own TSMC with an average weight close to 10%. If the primary thesis for avoiding China is the risk of a move against Taiwan, then holding a highly concentrated position in Taiwan is logically inconsistent.
The thesis, stress-tested
✓ What validates it
- —
▸ Risks discussed
- ▸Geopolitical escalation between China and Taiwan
- ▸Fund concentration limits restricting further allocation
Hear it yourself
"93% of all long on lease own TSMC in some sort of capacity, and the average weight of all those long on lease are is very close to 10%. So they are underweighted. So I think that they recognize that maybe the valuation is a little bit stretched."
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