A recent Motley Fool research report on the “Magnificent Seven” stocks raises concerns about their increasing influence on the S&P 500 index. These seven companies have outperformed the index significantly, with a 697.6% return from 2015 to 2024. They now represent 34.3% of the S&P 500, up from 12.3% in 2015.

The heavy weighting of these top holdings in the S&P 500 raises worries for investors who may not realize their concentration in just a few companies. During bear markets, the S&P 500 tends to be more resilient than the Magnificent Seven, with the top holdings falling twice as hard in 2022. Consider alternative index funds like the Invesco S&P 500 Equal Weight ETF to diversify.

The Invesco S&P 500 Equal Weight ETF holds each of its 500-some components in roughly equal proportion, mitigating the risk of overconcentration on a handful of stocks. While this equal-weighted fund may not soar as much in booming years, it may offer more stability during downturns when tech giants retreat. Consider diversifying your investments for a more balanced portfolio.

Read more at Yahoo Finance: Should Investors Be Worried That the “Magnificent Seven” Make Up 35% of the S&P 500?