Every S&P 500 Sector ETF Ranked by How Much It Actually Depends on Just 3 Stocks
Sector ETFs give the impression of diversification. Most of them don't have it.
Overview
Sector ETFs often feel like diversified portfolios built around a specific industry. You own dozens of companies to add exposure to the sector itself without trying to pick individual winners.
The problem is that most of them aren't actually built that way.
Because the vast majority of them are market-cap-weighted, just a few stocks can dominate these ETFs. A lot of attention is paid to the top-heaviness of the S&P 500 and the tech sector because those companies are dominating the artificial intelligence (AI) trade right now.
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Source
Originally published at www.fool.com.
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Disclaimer: This article is for informational purposes only and does not constitute investment advice. Data may be delayed up to 15 minutes. Past performance is not indicative of future results. Consult a licensed financial advisor before making investment decisions.