Should You Invest in ETFs or Just Own Shares of Nvidia, Apple, and Microsoft?
Investing in exchange-traded funds (ETFs) can provide you with some great diversification. But sometimes those ETFs can have significant exposure to just a few stocks, which negates the benefit of investing in ETFs for the purposes of diversification in the first place. And when you find a top-performing ETF that's doing extremely well, that's what you'll often find: It's doing well due to a few large positions.
If you're investing in growth or tech-focused funds, you'll often find that tech giants Nvidia, Apple, and Microsoft make up considerable positions in those ETFs.
For example, the Invesco QQQ Fund has risen by around 150% in the past five years. The Technology Select Sector SPDR Fund is up by 170%. You might think that these are phenomenal investments that can also give you some terrific diversification to keep your risk down. But is that really the case?
Source Fool.com