For many of our clients they often ask about simply holding a basket of ETFs, or only buying an S&P 500 ETF in their portfolio since it’s “broad market exposure”. I don’t disagree with that position, but it’s important to understand what that actually means for your portfolio.
Just because something is marketed as diversified doesn’t mean it is. It can feel diversified, especially when you’re buying the S&P 500 or other large indices. But if you don’t understand the underlying holdings, the index composition, and what is driving it up and down, you’ll end up confused (and potentially alarmed) when your portfolio doesn’t move as expected.
As of mid-2025 over 33% of the S&P 500 is now concentrated in the Mag 7 (based on market cap). Those companies have been a great growth driver (a trend we discussed in our 2025 Market Outlook), but let’s be clear about what the S&P 500 is now. The S&P is no longer really “broad” exposure – it’s a tech and comms services bet in disguise.
Add a few growth or tech ETFs that you might also hold, and suddenly your portfolio isn’t diversified at all. It’s just the Mag 7 in triplicate.
If you want to be concentrated, great, but make sure it’s intentional, not accidental.
Portfolio design matters more than ever.
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