Vanguard’s broad market ETF is VTI. Their S&P 500 ETF is VOO.
The correlation between VTI and VOO is 0.99, which is considered to be high.
Calling 0.99 “high” is an understatement. Investing in VOO rather than VTI is increasing your unsystemic risk by about 1%, or 2% if you’re measuring by variance rather than standard deviation. They both have an expense ratio of 3 bp, so if you’re worried about unsystemic risk, go ahead and buy VTI rather than VOO. But it’s not a large difference either way.
The reason VOO has a large amount of value invested in tech stocks is because tech stocks are a large portion of the overall stock market value. Any ETF that tries to minimize unsystemic risk is going to be invested heavily in tech stocks.
The Efficient Market Hypothesis says that if the market is risk averse, stocks will be priced in a way that your risk-adjusted returns are maximized by having a cap-weighted investments.
In Nosjack’s answer, they claim that equal weight funds reduce unsystemic risk. This is false. Systemic risk is, by definition, the risk one would have with cap weighted investment. Any deviation from that is introducing unsystemic risk. On top of that, equal weight funds tend to have around seven times the expense ratios.
