Jared Gross said investors can use ETFs to rebalance passive global equity portfolios without overhauling policy benchmarks, arguing the vehicle offers liquidity, transparency and quick tactical shifts.
More than 60% of global equity market capitalization now sits in the U.S., he said, leaving benchmarks such as MSCI ACWI less diversified and increasingly tilted to large-cap technology stocks.
Gross said investors can de-concentrate by splitting U.S. and international exposure, shifting from cap-weighted indexes to active or systematic strategies, or using option-based ETF approaches to trim volatility inside U.S. holdings.
He said the approach could suit institutions from pensions to endowments, especially when passive global equities make up a large share of portfolios rather than a small 5% sleeve.
Gross framed the risk as a benchmark-design problem as much as an active-passive debate, noting Japan once reached about 45% of global equity markets in the late 1980s.