One of the many appealing attributes of ETFs is the ability to achieve broad exposure through the purchase of a single ticker, thereby whittling away any company-specific risk that comes with individual stock picking. While the “instant diversification” provided by ETFs and mutual funds can go a long way towards minimizing the impact of a single security on bottom line returns, it is important to note that certain ETFs can still feel the pinch from poor performances out of a single stock. For starters, not all ETFs are created equal in terms of balance and depth of the underlying portfolios. While some stock ETFs have thousands of individual holdings and don’t assign a weight of more than 1% to any single security, others are more top heavy in a few big names. For example, Exxon Mobil (XOM) accounts for about 19% of the Energy SPDR (XLE), with Chevron making up [...] Click here to read the original article on ETFdb.com. Related Posts: ETFs With Significant Goldman Sachs Exposure Are Big Banks In Trouble? Three ETFs To Watch ETF Insider: Picky Bulls, Broad Bears Friday’s ETF To Watch: Financials Sector Fund (RWW) Three ETFs To Watch This Week: XLF, SIL, INP
One of the many appealing attributes of ETFs is the ability to achieve broad exposure through the purchase of a single ticker, thereby whittling away any company-specific risk that comes with individual stock picking. While the “instant diversification” provided by ETFs and mutual funds can go a long way towards minimizing the impact of a single security on bottom line returns, it is important to note that certain ETFs can still feel the pinch from poor performances out of a single stock. For starters, not all ETFs are created equal in terms of balance and depth of the underlying portfolios. While some stock ETFs have thousands of individual holdings and don’t assign a weight of more than 1% to any single security, others are more top heavy in a few big names. For example, Exxon Mobil (XOM) accounts for about 19% of the Energy SPDR (XLE), with Chevron making up [...]
Click here to read the original article on ETFdb.com.
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