As Barron’s notes, other niche ETFs are top-heavy. For example, the top four holdings in the Global X Social Media Index ETF (NasdaqGM: SOCL) combine for over a third of that ETF’s weight. Some international ETFs are afflicted with the same condition. Barron’s highlights the iShares MSCI Spain Capped ETF (NYSEArca: EWP), among others, where just three stocks command almost 44% of the fund’s weight.
Not all narrowly-focused ETFs present single-stock risk to investors. The wildly popular PureFunds ISE Cyber Security ETF (NYSEArca: HACK) allocates no more than 5.8% of its weight to any of its 31 holdings.
The BioShares Biotechnology Clinical Trials Fund (NasdaqGM: BBC),which only includes companies with a lead drug candidate in a Phase 1, Phase 2 or Phase 3 trial, allocates no more than 3.62% of its weight to its roughly 65 holdings.
Guggenheim Solar ETF
