The Research Department (TRD) is warning that hi-tech high performance funds could be leading a dangerous investment trend.
The watchdog which monitors all UK unit trust and OEIC funds, ISAs and life, pensions and investment trusts funds says that the bubble may be about to burst,
They are concerned the FTSE 100 and index tracking funds are increasingly polarised towards technology, media and telecoms companies.
The recent shake-up of the FTSE 100 which saw the exit of 10 major blue chips and the entry of new technology companies gives weight to their warning.
Head of investment Fraser Donaldson says: “The rise in expectations and the increasing difficulty for fund managers to diversify across the FTSE could lead to many investors being disappointed on the long term performance of their funds.”