Market alarm 2025: Is there a risk of a mega fund collapsing? Experts warn!

After the strong stock market year of 2024, investors are faced with the challenge of repositioning themselves for 2025. Experts at Banque Syz have carried out an analysis that identifies ten possible surprising market developments. Particularly alarming is the risk of a potential collapse of a mega-fund, which could lead to possible chain reactions and real risks in the market. Despite these warnings, forecasts for the coming year remain optimistic, with Banque Syz anticipating robust economic growth and strong double-digit growth expectations among S&P 500 companies.

Low real interest rates in industrialized countries could also have a positive impact on market prospects. However, investors should be cautious and not expect unbridled upward trends as there are challenges to be overcome. A significant risk could be a large fund that may be mispositioned and involved in unfavorable trades. The background to these concerns is the concentration risk of the “Magnificent 7” stocks and the rise of 0DTE options, which are particularly popular with small investors.

Risks and historical comparisons

A wrong investment could trigger serious chain reactions in other trades and lead to a volatility event. Historical events such as the flash crash of 2015 and the collapse of the hedge fund LTCM in 1998 could serve as models for this. In addition, “Volmageddon” events in 2018 led to a volatility shock and billions of dollars in losses. The hype surrounding NVIDIA could entice fund managers to make further investments in the space, increasing the risk of potential market surprises, as well finance.net reported.

In parallel to these developments, the ETF market in Europe continues to grow rapidly. In the period from January to September 2024, net inflows totaling 161 billion euros were recorded, meaning assets in ETFs exceeded the $2 trillion mark for the first time. Over half of these inflows came from US stock ETFs, which were able to attract 75.9 billion euros in new investments by November 2024 The investment communicates. Dominant US tech companies including Apple and Google continue their upward trend, benefiting from the ongoing AI boom, while active ETFs that offer excess returns at lower costs are also gaining traction.