By Saqib Iqbal Ahmed

NEW YORK, Oct 1 (Reuters) – The recent stock market rally has left some systematic trading strategies so heavily exposed to equities that even a modest market pullback could force them to dump billions of dollars of shares, amplifying any potential selloff.

Volatility control funds – systematic investment strategies ‌that typically buy equities when markets are calm and sell when they grow turbulent – bought up stocks as the S&P 500 rose 12% for the year.

As ‌stocks have rallied on robust earnings performance, propelled by spending to build out AI infrastructure, volatility has petered out, meaning these strategies needed to ramp up risk-taking.

The buying…