Equal-weight and small-cap ETFs: Reducing concentration risk

The landscape of equity investing in 2025 is marked by a renewed focus on diversification and risk management. As mega-cap stocks have come to dominate traditional benchmarks, investors are increasingly concerned about concentration risk—the possibility that a handful of large companies can drive the performance (and volatility) of an entire portfolio. In response, Equal-Weight and Small-Cap ETFs have surged in popularity, offering a more balanced approach to equity exposure and the potential for enhanced returns. This article explores why these ETFs are gaining traction, how they work, their unique benefits and risks, and which funds are leading the way this year.

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