Diversification is the lifeblood of investing, but investors might not be as diversified as they think.
That’s the warning from Apollo’s Torsten Sløk, who tells investors not to mistake owning the S&P 500 with having a diversified portfolio. The problem is the growing number of companies that make up 3% or more of the index. These days, they include Nvidia, Apple, Microsoft, which each make up 6% or more of the index, Amazon.com and Alphabet, which make up more than 4%. “The combined weight of stocks with a weight of 3% or more in the S&P 500 index is at an all-time high and continues to rise,” Sløk writes.
Ben Levisohn | Barron’s