The recent rally in US stocks has left some systematic trading strategies heavily exposed to equities, raising the risk that even a modest market pullback could trigger billions of dollars in selling and amplify any downturn.
Volatility-control funds, which typically increase equity exposure when markets are calm and cut it as volatility rises, have accumulated stocks as the S&P 500 has climbed about 12% this year. The rally has been supported by strong corporate earnings and heavy investment in artificial intelligence infrastructure, according to a reprot by Reuters.
