From CNBC: 2025-02-06 19:00:01

Big Tech’s dominance in the stock market is concerning for diversification. Astoria Portfolio Advisors CEO John Davi warns that the S&P 500 is heavily weighted towards the “Magnificent Seven” stocks like Apple, Microsoft, and Amazon, leaving investors vulnerable to concentration risks.

To address this issue, Davi’s firm offers the Astoria US Equity Weight Quality Kings ETF (ROE), which invests in 100 high-quality US large and mid-cap stocks to mitigate market-cap weighting risks. This ETF aims to provide a higher marginal contribution to risk and return for long-term investors.

As of January 31, the top 10 stocks in the S&P 500 are primarily big tech companies, accounting for around 36% of the index. In contrast, the Astoria US Equal Weight Quality Kings ETF maintains a diversified approach with each stock weighted around 1%, resulting in a 26% increase since its launch in July 2023.

For investors seeking alternative ETF options beyond Astoria’s offering, VettaFi’s Todd Rosenbluth suggests looking into funds like Invesco’s S&P 500 quality ETF (SPHQ) or American Century’s QGRO ETF, which filter stocks based on quality, growth characteristics, and additional factors to enhance diversification and potential returns.

Read more: Big Tech, Magnificent 7 stock exposure: Time to reduce?