A potential $2trn-plus initial public offering (IPO) by Anthropic could create a 'Magnificent Nine' and expose a diversification “blind spot” for pension schemes, Isio has warned.

Reports suggest Anthropic could seek a valuation of more than $2trn in a potential stock market debut, which would follow SpaceX’s listing earlier this year.

Isio chief investment officer, Barry Jones, warned that the emergence of another company of this scale could further increase pension scheme exposure to a relatively small group of technology and artificial intelligence (AI) businesses.

“The Magnificent Seven have dominated equity markets for several years,” he explained.

“SpaceX’s listing effectively added an eighth major name to that group and, with Anthropic now potentially coming to market at a valuation north of $2trn, we could soon be talking about the ‘Magnificent Nine’.”

The Magnificent Seven is traditionally made up of Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia and Tesla.

Jones noted that many pension schemes had significant exposure to market cap-weighted equity indices, meaning a large Anthropic listing could further increase concentration.

However, Isio warned that the risk extended beyond pension schemes’ equity allocations.

Jones highlighted that many of the same large technology companies increasingly dominating equity markets were also becoming significant issuers of corporate debt.

As a result, a portfolio could appear diversified through holdings across equities and corporate bonds while still having substantial underlying exposure to the same companies and AI investment cycle.

He warned that this could create a “blind spot” in traditional pension scheme risk modelling if assumptions about diversification between asset classes did not account for common underlying exposures.

“Equity and debt exposures to the same companies could come under pressure at the same time, so schemes should consider whether traditional correlation assumptions fully capture that concentration risk,” Jones stressed.

Despite the concerns, Jones stated that AI and large technology companies were likely to remain an important part of pension scheme portfolios.

“As these businesses become an even bigger part of public markets, trustees need to understand how much exposure they have across the portfolio and consider how that concentration could affect portfolio resilience during periods of market stress,” he added.

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