One of the primary advantages of many equity-based exchange traded funds is that these products help investors skirt single stock risk.
However, that is not the case for all stock ETFs as some ETFs, including some well-known international funds, have significant exposure to just one stock.
That is true of the iShares MSCI Taiwan ETF (NYSEArca: EWT), which allocates a significant portion of its weight to chip giant Taiwan Semiconductor (NYSE: TSM).
EWT has, at various points during its almost 16-year history, been a favorite among investors seeking single-country exposure to developing economies because Taiwan is one of the least volatile emerging markets.[related_stories]
But EWT’s docile reputation relative to other single-country emerging markets exchange traded funds does not mean the fund cannot generate big returns.
SEE MORE: Are China ETFs Ready to Rally?
EWT’s hefty technology sector allocation, which is more than 57% of the fund, has become problematic. Moreover, it is the ETF’s arguably excessive weight to one stock, Taiwan Semiconductor (NYSE: TSM), that is creating EWT’s problems.