A big concern with investing in many exchange-traded funds (ETFs) these days is that they are heavily exposed to a handful of the top tech stocks in the world. And that can be risky, particularly at a time when valuations are incredibly high.
One ETF that can make for a suitable alternative to this is the WisdomTree U.S. LargeCap Fund (NYSE Arca:EPS). As its ticker symbol suggests, its focus is on earnings and investing in profitable companies. It has around 500 holdings in its portfolio and it charges a fairly low expense ratio of 0.08%, making it an attractive option to buy and hold.
It is invested in the top companies but its exposure is not as significant as other ETFs. Nvidia (NASDAQ:NVDA), for example, is among the top stocks in the portfolio, but it accounts for less than 6% of the ETF’s overall weight. And in total, its top five holdings account for roughly 27% of the entire portfolio.
The ETF is a far more attractive option given its more diversified portfolio, which helps to reduce the overall risk for investors. In a market downturn, the selloff can be steep, especially amid highly valued stocks. While the ETF won’t be immune to those effects should they happen, it’s a bit safer than other funds.
Just over 25% of its position is in tech stocks, with financials accounting for 18%, and communication services representing nearly 14% of its portfolio.
This can be a good ETF to buy if you’re looking for a bit more safety in both the short term and the long term. Year to date, the WisdomTree ETF has risen by around 12%, and in five years, it’s up over 90%.
