 Under here, welcome to my channel on investing. Today, I would like to talk about why investing in certain ETFs is like stock picking. And therefore, this may require stock research or even looking at stock valuations. And this is especially true for funds that are top heavy. So let's define the issue first. There are of course ETFs that track broad market indices, such as the system P500 or total stock market portfolios. I'm not talking about them. These funds are well diversified and not top heavy. Their top 10 concentrations rarely reach 30% and no single sector accounts for more than 50%. But the issue arises when you venture outside of these ETFs and step into the top-heavy territory for stocks and sectors. Take for example Vanguard Information Technology ETF or VGT. The fund exclusively focuses on IT sector, but it is exceptionally top heavy with the top 3 companies accounting for 45%. So 45% of your money invested in these 3 stocks would to a large extent define the investment outcome. Or take the AI-focused fund called Global X Robotics and Artificial Intelligence ETF. Its top 10 holdings account for 61%. This high concentration is like a double-edged sword. In good years, returns are amplified. But in bad years, the losses are worse. It takes just a few bad apples to spoil the jam. There are even more extreme instances. Take for example ARC Innovation ETF or ARKK. The fund was quite concentrated back in 2021. But what's worse, the fund was loaded with high-risk biotech and thin-tech companies. What's more, these companies were unprofitable. The ETF had a good run up before 2020. But if you didn't pay attention to what Katie Wood was doing back then, the returns since 2021 have been terrible. The problem is that most people view ETFs as something to invest and forget. It's a diversified basket of stocks, so should be good, right? But the performance of any ETF is only as good as its underlying stocks. Thus, researching ETFs' stock selection process and concentrations are a must. If I were thinking of investing in, let's say, VGT, I would make sure to understand the risk payoff profile of its top two or three stocks. I would look at stock variations and their future earnings prospects. True, the trio of Microsoft Apple and Nvidia is a collection of large and highly profitable companies. But there's nothing says that they cannot underperform in the future, especially after some of them spiked on the AI trend. That's it for this video. I hope it got you thinking and will help you in the future. Please give this video a like and subscribe to my channel for more content on investing. Thank you for watching.