Never mind tech. Investors should check out this unloved sector 

​Never mind tech. Investors should check out this unloved sectorSEEMA SHAHThe Magnificent Seven have been riding high in portfolios, but a threatened trade war and the arrival of DeepSeek highlight the risk of sticking to one sectorInvestors have a decent record in ignoring warning signs. In the wake of any big market sell-off, legions of sages have tended to pop up and lament, after the fact, that “the warning signs were there”. Yet the lead-up to each of these reverses has usually been a period of carefree investor exuberance. In other words, if the signs really were there, very few people were paying attention.So far, 2025 has provided a slew of warning signals. These don’t presage some sort of impending market crash (for clarity, I don’t think that’s on the cards), but they do point towards something serious — namely, the risk of assets being insufficiently diversified in many investors’ portfolios and their vulnerability if we were to experience any kind of correction, or even slowing earnings, in the tech sector.The first, and most obvious, warning signals are, well, actual warnings. At the World Economic Forum in Davos last month, Nicolai Tangen, head of Norway’s $1.75 trillion (£1.4 trillion) sovereign wealth fund, repeated his contention that the most urgent danger facing financial markets is the concentration of the Magnificent Seven tech giants in investment portfolios.• Meet the trillion dollar man managing the world’s largest wealth fundThe next red flag was the sharp drop in tech share prices two weeks ago. This followed the revelation that the Chinese start-up DeepSeek can seemingly rival the performance of big AI players such as OpenAI and Meta at a fraction of the cost, requiring less energy and without access to advanced semi-conductor chips. Nvidia’s stock initially plunged about 17 per cent, wiping hundreds of billions of dollars off its valuation.AdvertisementAnd last week we received confirmation, were it needed, that erratic is likely to be the new normal in financial markets during the presidency of Donald Trump. When they opened on Monday, global stock markets lurched downwards as the US slapped punitive taxes on Canada, Mexico, and China. By the end of the same day — after friendlier than expected chats between Trump, Claudia Sheinbaum of Mexico and Justin Trudeau of Canada — tariffs had been put on hold for a month and markets rebounded as fund managers reflected that, on balance, the president had probably been exaggerating, a bit, all along.Second-guessing the decisions of a president who views his own unpredictability as an important strategic asset is fraught with peril. As a result, while stocks regained some of their initial losses, investors remain on high alert over what might be announced next.• DeepSeek, Nvidia and how to handle a tough week in the marketsAs a crude estimate, up to 10 per cent of UK pension assets will probably be invested in the Magnificent Seven and almost a quart