Narrow-Focused ETFs Carry Risks, Advisors Warn
“Diverse in number, but not in exposure.” – Michael Macauley, Signature Estate & Investment Advisors
Even the mighty S&P 500 isn’t immune to concentration risk. A handful of tech giants now drive the entire index, moving in lockstep and reducing true diversification.
But here’s the nuance: Companies like Amazon aren’t just online retailers anymore – they’re in streaming, cloud computing, and multiple industries.
“This in and of itself represents business diversity,” says Macauley.
The takeaway? Don’t just count holdings – understand what really drives your investments.
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Market Commentary|April 2022