A new HOPES for derisking concentrated positions
Morgan Stanley's HOPES paper is worth a read
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A new HOPES for derisking concentrated positions
Morgan Stanley’s HOPES for Concentrated Equity: A Multi-Strategy Approach (June 2025) is perhaps the most comprehensive white paper I’ve seen on derisking concentrated public equity positions.
HOPES is a framework for organizing concentrated stock solutions.
You may notice some of the usual characters, like tax-loss harvesting, exchange funds, and long/short is increasingly making its way into lists like this.
Then there are equity swaps, which I rarely hear about but certainly have a place in the toolkit.
In my mind, this framework leaves out §351 conversion (seeding an ETF) and Qualified Opportunity Funds, but those are both somewhat limited. The §351 conversion limits concentrated positions to only 25% of the seed portfolio, while QOF transforms equity concentration into real estate concentration. I think both could be part of a solution, but not a total solution alone.
Here are some visual highlights from the paper.