Beware top-heavy ETF's

Investing in stocks is inherently risky, and the best way to reduce risk and maximize returns is to invest in a diverse portfolio over the long term. Index funds fit the bill, with low total expense ratios and a built wide basket of stocks. If you’re interested in even greater diversity, you invest in foreign ETF’s. Jason Zweig points out that …

Some emerging-market ETFs invest in indexes that are so concentrated that they mightn't fully reflect the real economy. The Brazilian market "has been top-heavy for years," says Dina Ting, who manages the iShares MSCI Brazil ETF. "There's two big companies, and then the stocks just fall off a cliff in terms of size.

Check out how big Carlos Slim's America Movil is.