Are You Really As Diversified As You Think?

Matt Thalman - Contributor - ETFs

A while back I pointed out that due to Apple's (AAPL) market capitalization, a large number of ETF's were massively over-weight the technology giant. In some cases, Apple represented more than 5%, 7% or even 10% of the total value of the ETF based on how many holdings the fund actually owns.

I recently came across an ETF that is not only overweight Apple by a massive amount, with maker of the iPhone representing more than 13%, but its top 5 companies (6 holdings since Google (GOOG)(GOOGL) has two stock classes) represent more than 37% of the fund, of which might I add has over 100 holdings. Furthermore though, what makes this so interesting is that the ETF I am talking about tracks a major index, which simply adds to the myth that the fund is helping investors diversify and is a safer way to invest. Continue reading "Are You Really As Diversified As You Think?"