Index Fund Investors Might Not Be as Diversified as They Think
Investing in an S&P 500 index fund is one of the simplest ways to grow your money. The large-cap stock index is used as a barometer for the overall stock market, and many say an index fund will provide instant diversification.
But an S&P 500 index fund merely reflects the market. And the market is currently favoring big technology stocks like Apple and Microsoft, meaning S&P 500 index fund investors may currently find themselves overweight in technology stocks when that's not what they were aiming for.
As of mid-August, Apple's weight in the S&P 500 index reached 7.4%. That's the highest weighting of any single company in the index since 1980, when IBM and AT&T were battling to be the most valuable company in the world (with a whole bunch of energy companies close behind).
Source Fool.com
