"Index investors and so-called Bogleheads (those who love the Vanguard ETFs) may not be all too fond of the sector ETFs, especially when you consider that simply buying the S&P"
"S&P 500 is now more of a tech index. It's certainly tech-heavier than anytime in the past, even as the Mag Seven names begin to consolidate for a bit longer. As the AI revolution plays out and the Mag Seven grow stronger, I certainly wouldn't be surprised if the information technology sector were to eventually make up closer to 50% of the index. With the likes of Alphabet ( NASDAQ:GOOGL), a tech stock that's grouped in the communication services sector, one could argue that the"
"tech exposure in the S&P is far greater than it seems on the surface. Arguably, the real tech exposure may already be closer to 45% of the basket of 500 stocks. In any case, those who, for some reason or another, don't want so much tech and AI exposure (AI bubble fears perhaps?), there's a quick and easy fix: sector"
The S&P 500 has grown heavily weighted toward technology because of the Magnificent Seven and may already represent roughly 45% of the index, potentially approaching 50% as AI and big tech expand. Alphabet's classification in communication services masks additional tech exposure, increasing effective tech concentration in the broad index. Investors seeking less tech and AI exposure can rebalance using sector ETFs, though concentrated sector bets have historically carried risks. Sector ETFs remain a useful passive tool for added diversification or targeted opportunity. The State Street Utilities Sector SPDR ETF (XLU) is recommended as a defensive, underrepresented diversifier that could benefit from rising power demand tied to AI data centers.
Read at 24/7 Wall St.
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