The S&P 500 Is Too Exposed To Big Tech, Time To Buy JPMorgan’s Mid Cap Equity ETF Instead

Core Insights - The S&P 500 has a significant concentration issue, with its top 10 holdings making up 39% of the portfolio, heavily influenced by major tech companies [2][8] - The JPMorgan BetaBuilders U.S. Mid Cap Equity ETF (BBMC) offers a diversified alternative, spreading investments across over 200 mid-cap companies with no single holding exceeding 0.73% [3][8] Group 1: Concentration and Diversification - The top 10 holdings of the S&P 500 account for over 20% of the portfolio, primarily driven by tech giants like NVIDIA, Apple, and Microsoft [2] - BBMC's structure allows for a more balanced risk profile, with its top 10 positions representing only 5% of assets, contrasting sharply with the S&P 500 [3][8] Group 2: Sector Allocation - BBMC's sector allocation is more balanced, with Industrials leading at 20%, followed by Financials at 15%, and Information Technology at just 13% [4] - This diversified approach is beneficial when mega-cap tech faces valuation pressures or when economic cycles favor different sectors [4] Group 3: Mid-Cap Advantages - Mid-cap companies, like those in BBMC, have established business models and growth potential without the high valuations of mega-caps [5] - BBMC includes established firms such as Jabil, Williams-Sonoma, and Ciena, which possess pricing power and market share but trade at more reasonable multiples [5] Group 4: Cost Efficiency - BBMC features a low expense ratio of 0.07%, costing only $7 annually per $10,000 invested, which is advantageous for investors [6] - The fund maintains a 13% portfolio turnover, ensuring tax efficiency while capturing mid-cap opportunities [6] Group 5: Performance Context - Year-to-date performance shows the S&P 500 returning 18% through late December 2025, while BBMC returned 14%, highlighting the trade-off between concentration risk and diversification [7][8]