Craig Toberman, Founder of fee-only financial planning firm Toberman Wealth, was recently featured by Bloomberg Wealth on how to protect your investment portfolio in a volatile market.
Craig recommends that investors “consider S&P funds with an ‘equal-weighted’ basis”. Why?
There is no rebalancing feature built into the S&P 500, which is ‘market-cap-weighted’. An exchange-traded fund that tracks the index can be heavily weighted toward the largest companies, so it isn’t a surefire way to diversify.
Craig also adds that “the top 10 companies (in the S&P 500) make up over 30% of the fund” and points out that “many retirement funds that many Americans assume are diversified are heavily weighted tech”.
With equal-weighted S&P 500 funds, every stock has 1/500th of the weighting, meaning that the top 10 hold 2% of the fund. “Such funds may have higher fees than their market-cap-weighted peers because they require a bit more management”, Craig explains.
Read what other financial planners had to say in the full article here.
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Craig Toberman is a Partner at Toberman Becker Wealth – a fee-only, fiduciary financial advisor based in St. Louis. He assists families and businesses with strategic financial planning and long-term wealth management. He has over a decade of experience in financial services and has crafted custom financial plans for hundreds of families and businesses.