Concentration Risks in the Stock Market: Two ETFs to Hedge

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The U.S. stock market, that great cosmic teapot of capital, teeters on a knife’s edge. Elevated valuations, tariffs, and a curious overreliance on a handful of corporate titans have created a situation where the entire S&P 500 could collapse like a house of cards built by a sleep-deprived intern. (This is not a metaphor. It is a warning. And a punchline. And possibly a legal disclaimer.)

The top 10 stocks in the S&P 500 now account for 40% of its market cap. This is not a new trend-it’s a quantum leap backward in terms of diversification. If the S&P were a dinner party, these ten stocks would be the ones hogging the main course, leaving the rest of the guests to nibble on appetizers. Goldman Sachs’ David Kostin, with the solemnity of a man who has seen too many spreadsheets, warns that this concentration could lead to “lower S&P 500 returns over the next decade.” (He also probably owns shares in the company that sells spreadsheets. Full disclosure: this is not a financial tip. It’s a story about a teapot.)

Enter the equal-weight index funds: a bureaucratic solution to a bureaucratic problem. Two ETFs, Invesco S&P 500 Revenue ETF (RWL) and Invesco S&P 500 Equal Weight Technology ETF (RSPT), offer a way to hedge against this cosmic imbalance. Think of them as the universe’s way of saying, “Let’s spread the wealth, even if it’s just a little.”

1. Invesco S&P 500 Revenue ETF

This ETF is like a dinner party where everyone pays their share based on how much food they brought, not how much they ate. Instead of weighting stocks by market cap, it uses trailing-12-month revenues, capping any single stock at 5%. This means Walmart and Amazon, those titans of retail, are politely asked to sit down and stop hogging the spotlight. (Their lawyers are probably drafting a counteroffer. This is not a financial tip. It’s a story about a teapot.)

  1. Walmart: 3.8%
  2. Amazon: 3.5%
  3. Apple: 2.4%
  4. UnitedHealth Group: 2.3%
  5. McKesson: 2.2%
  6. CVS Health: 2.1%
  7. Berkshire Hathaway: 2%
  8. ExxonMobil: 1.8%
  9. Cencora: 1.7%
  10. JPMorgan Chase: 1.5%

During the 2022 bear market, RWL fell 18% compared to the S&P 500’s 25% drop. Earlier this year, when Trump’s tariffs caused a minor panic, RWL declined 15% versus the S&P’s 19%. But here’s the rub: when the big dogs win, equal-weight funds lag. Over the past decade, RWL returned 245% versus the S&P 500’s 310%. This is the price of not letting a few companies run the show. (Or, as the universe might say, “You’re welcome.”)

The expense ratio of 0.39% is a small tax on your portfolio, but for investors who value balance over sheer size, it’s a reasonable toll. After all, who wants to live in a world where a few companies hold all the power? (Spoiler: not this ETF.)

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2. Invesco S&P 500 Equal Weight Technology ETF

This ETF is the universe’s way of saying, “Let’s not let a few tech giants dominate the conversation.” It spreads the weight equally across 68 tech companies, ensuring that no single stock can decide the fate of the entire fund. (This is not a political statement. It’s a financial strategy. Probably.)

Over the past decade, this fund returned 468% compared to the S&P 500’s 310%. The technology sector, that glittering beacon of innovation, has been the market’s star performer. And with AI on the horizon, the future looks even brighter. Hedge fund manager Philippe Laffont predicts that tech could control 75% of the U.S. market cap by 2030. (This is not a prophecy. It’s a guess. With a spreadsheet.)

The expense ratio here is 0.4%, a slightly steeper toll but one that comes with the promise of diversification in a sector poised for growth. After all, who doesn’t want to invest in the future? (Spoiler: everyone who’s not in this ETF.)

As we navigate this labyrinth of market concentration and cosmic absurdity, remember: the goal is not to outperform the S&P 500, but to survive it. And if that means paying a little extra for balance, well-so be it. The universe is a strange place, and sometimes the best strategy is to spread the risk, even if it’s just a little.

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2025-09-27 11:24