“Diversification is the only free lunch in investing,” said Harry M. Markowitz, the father of modern portfolio theory. He referred to the idea that broad diversification is likely the best way to limit portfolio risk without sacrificing returns.
The opposite view holds that a concentrated portfolio actually entails lower risk because a manager can focus on fewer stocks and conduct much deeper research. In other words, “knowing more about less.” Such high-conviction managers typically construct portfolios with no more than 20 to 40 positions, where the ten largest holdings represent the majority of assets. These portfolios are often constructed without regard for a benchmark, resulting in significant deviations in exposure compared to the broader equity market. The tradeoff, however, is increased exposure to idiosyncratic and company-specific risks, which can heighten volatility, particularly in the short term.
We examine two funds characterized by highly concentrated portfolios: BlackRock Global Unconstrained Equity and Ninety One GSF Global Franchise. The BlackRock fund earns a Morningstar Medalist Rating of Silver, while the Ninety One fund carries a Bronze rating.
People
BlackRock Global Unconstrained Equity is managed by an exceptionally skilled and experienced duo, Alister Hibbert and Michael Constantis. They are supported by a trio of analysts, all of whom previously worked on the renowned fundamental European equity team. While the team is relatively compact, it benefits from access to BlackRock’s extensive research infrastructure, including quantitative tools and a globally integrated research network. The team applies a distinctive focus on cognitive and behavioral biases that can emerge when managing concentrated portfolios with a long investment horizon, such as the endowment effect. Despite the presence of key-person risk, the People Pillar rating is High.
The Global Franchise strategy from Ninety One is managed by Clyde Rossouw. He leads and is supported by a team focused on investing in quality companies. This focus allows the analyst team—whose size has grown over time—to concentrate on a limited number of stocks. As a result, Rossouw has access to extensive resources. Although not all analysts are dedicated solely to this strategy, the team fosters a highly collegial culture, with all members participating in the same research meetings, which benefits idea exchange and research efforts. However, because the team does not focus exclusively on global strategies, the People Pillar rating remains at Above Average.
Process
The Process Pillar rating for both BlackRock Global Unconstrained Equity and Ninety One GSF Global Franchise is Above Average. The two funds share a long-term, quality-oriented investment philosophy but differ in approach and execution. BlackRock emphasizes long-term growth, while Ninety One combines quality with stricter valuation discipline.
BlackRock’s strategy targets companies with structural advantages and strong profit growth potential. The team relies heavily on in-depth qualitative research, including franchise analysis, disruption risk, growth opportunities, cyclicality resilience, balance sheet strength, ESG considerations, and management quality. Less emphasis is placed on short-term valuation, as the managers believe markets often underappreciate long-term potential.
Ninety One uses a bottom-up process that integrates quality screening with valuation metrics, selecting companies with strong business models, high cash flow conversion, and disciplined capital allocation. The strategy narrows its investable universe through systematic screening and applies rigorous fundamental analysis.
Portfolio
Both BlackRock Global Unconstrained Equity and Ninety One GSF Global Franchise are global equity strategies where the managers express their conviction through highly concentrated portfolios. As of the end of April 2025, the BlackRock fund held only 23 positions, with the top ten accounting for 53 percent of the portfolio. Among these were Visa at a 9.6 percent weight, and Cadence Design Systems, Microsoft, and S&P Global, each with weights of approximately 6 percent or more.
The Ninety One fund had a slightly higher number of holdings at 29, but its top ten made up 56 percent of the portfolio. Microsoft and Philip Morris International were among the largest positions at over 7 percent, followed by ASML and Booking, each with weights above 5 percent.
Both funds are part of the Morningstar Global Large-Cap Growth Equity category, but BlackRock’s portfolio generally exhibits a much stronger tilt toward growth stocks than Ninety One GSF Global Franchise, driven by the latter’s stricter valuation discipline.
Another distinction between the two funds is sector allocation. BlackRock is underweight the technology sector relative to the Morningstar Global Growth TME category benchmark, while Ninety One maintains a more neutral position in this sector. Constantis and Hibbert, on the other hand, find more opportunities in the consumer cyclicals and industrials sectors, both of which are overweighted versus the index. Rossouw stands out by holding no exposure to the industrials sector, instead favoring consumer defensives and financial services.
Performance
Both funds have delivered strong results over various periods compared to their peers in the Morningstar Global Large-Cap Growth Equity category. However, both also show underperformance relative to the Morningstar Global Growth TME category benchmark, mainly due to the stellar performance of the Magnificent Seven in recent years. These stocks carry significant weight in the index but are either absent or underrepresented in both portfolios. BlackRock Global Unconstrained Equity has also exhibited noticeably higher volatility than category peers and the benchmark, consistent with its aggressive positioning. Meanwhile, Ninety One GSF Global Franchise, with its more defensive stance, has recorded lower volatility despite its concentrated portfolio.
Ronald van Genderen is Senior Manager Research Analyst at Morningstar. Morningstar analyzes and rates investment funds based on quantitative and qualitative research. Morningstar is part of the expert panel at Investment Officer.