One of the most popular index funds in the world is the Vanguard S&P 500 ETF (NYSEMKT: VOO). There’s a good reason for that. The exchange-traded fund (ETF) has a strong record of accurately tracking the benchmark S&P 500 index, and it charges a rock-bottom expense ratio to do so. It’s no wonder investors have trusted it with over $1 trillion in assets.
While the popular Vanguard fund does an incredible job at what it’s designed to do, investors should question whether buying an S&P 500 ETF is really what they need right now. If they’re looking for a diversified portfolio, they might be surprised to learn that 35% of assets in the fund are tied to just 10 companies. Likewise, nearly one-third of the fund is invested in tech stocks.
There are better ways to achieve a diverse portfolio. And while the S&P 500 has produced extremely strong returns over the last 15 years, the market is signaling these ETFs may provide better returns while providing greater diversification.
Source Fool.com