Let Freedom Ring… from Sector Overconcentration
This Fourth of July, while we celebrate independence, it's worth asking: is your portfolio truly free?
Free from overconcentration. Free from chasing headlines. Free from the weight of a few dominant stocks that swing your fate with every earnings call.
In today’s market, many cap-weighted benchmarks like the S&P 500, have become increasingly concentrated in a handful of mega-cap tech names. And while those stocks have certainly led in recent years, that leadership has come at a cost: less diversification, greater volatility risk, and an unhealthy dependency on one corner of the market.
That’s where Stratified Funds comes in, offering a refreshing declaration of independence through its sector-balanced strategies: the Stratified LargeCap Index ETF (SSPY) and the Stratified LargeCap Hedged ETF (SHUS).
The Tyranny of Tech?
Let’s be clear: innovation is a powerful economic force, and tech companies have earned their place at the top. But when one or two sectors make up nearly half of a cap-weighted index, it creates structural imbalance. This means investor portfolios may be more exposed to idiosyncratic risk than they realize—especially when macro winds shift or regulatory scrutiny tightens.
Cap-weighted indexes don’t rebalance in response to fundamentals—they follow momentum. And that momentum can leave investors overexposed at the worst times.
Sector Balance = Portfolio Freedom
Enter SSPY—the Stratified LargeCap Index ETF. Instead of concentrating bets on the biggest players, SSPY gives equal weight to each of the 11 GICS sectors. That means consumer staples gets the same representation as information technology. Utilities stand shoulder to shoulder with communications. It’s a sector-level rebalancing that aims to not allow a single narrative to dominate your equity exposure.
It’s not about predicting winners—it's about respecting balance.
This approach seeks to lower concentration risk, diversify sector exposure, and create a path through a changing economic landscape. Over the long term, that balance may better align with business cycles and offer more durable performance patterns than cap-weighted alternatives. [1]
A Hedged Twist with SHUS
If SSPY is the freedom fighter against overconcentration, SHUS takes it one step further—introducing built-in hedging through a systematic options overlay.
The Stratified LargeCap Hedged Index ETF (SHUS) offers the same sector-balanced exposure as SSPY but adds an options-based strategy designed to potentially mitigate downside risk during periods of market stress. Think of it as a portfolio seatbelt: not designed to stop every bump, but aimed at cushioning the impact of major shocks.
For investors seeking equity participation without fully surrendering to market volatility, SHUS may offer a middle ground.
Independence Through Innovation
In a market era where index investing often means handing over the reins to tech’s largest titans, SSPY and SHUS may offer a path back to balance. Back to fundamentals. Back to freedom.
Note: Options - refers to a financial instrument that is based on the value of underlying securities, such as stocks, indexes, and exchange-traded funds (ETFs). An options contract offers the buyer the opportunity to buy or sell—depending on the type of contract they hold—the underlying asset. Unlike futures, the holder is not required to buy or sell the asset if they decide against it.
Each options contract will have a specific expiration date by which the holder must exercise their option. The stated price on an option is known as the strike price. Options are typically bought and sold through online or retail brokers.
This July, declare independence from overconcentration—and explore strategies that align with your long-term vision.
Learn more about SSPY and SHUS.
Sources:
[1] Adam, Larry et al. S&P 500 Market Capitalization vs Equal Weighted, Raymond James, 2024.
Investors should consider the investment objectives, risks, charges and expenses carefully before investing. For a prospectus or summary prospectus with this and other information about the Fund, please call (866) 972-4492 or visit our website at https://stratifiedfunds.com/investor-materials. Read the prospectus or summary prospectus carefully before investing.
The Funds are distributed by Foreside Fund Services, LLC. Exchange Traded Concepts, LLC serves as the investment advisor. Foreside Fund Services, LLC. is not affiliated with Exchange Traded Concepts, LLC or any of its affiliates.
Investing involves risk, including loss of principal. The Funds are subject to certain other risks, including but not limited to, equity securities risk, large-capitalization risk, index tracking risk, passive strategy/index risk, and market trading risk. Investing involves risk, including possible loss of principal. There can be no guarantee the Fund will meet its investment objectives.
SSPY Risks: The Fund is subject to certain other risks, including but not limited to, equity securities risk, large-capitalization risk, index tracking risk, passive strategy/index risk, and market trading risk. Investing involves risk, including possible loss of principal.
SHUS Risks: The Fund is actively managed using a proprietary process, and there can be no guarantee that the Fund's investment strategies will be successful. The Fund may invest in Underlying Funds or Securities that are managed with a passive investment strategy, attempting to track the performance of an unmanaged index of securities. This differs from an actively-managed fund, which typically seeks to outperform a benchmark index. Maintaining investments in securities regardless of their individual performance or market conditions could negatively affect the Fund's return. The Fund is subject to certain other risks, including but not limited to, equity securities risk, large-, mid-, and small-capitalization risk, and market trading risk. Investing in securities of small and mid-sized companies may involve greater volatility than investing in larger and more established companies. Certain investments may be subject to restrictions on resale, trade over-the-counter or in limited volume, or lack an active trading market. Purchased put options may expire worthless and may have imperfect correlation to the value of the Fund’s sector based investments. Written call and put options may limit the Fund’s participation in equity market gains and may amplify losses in market declines. The Fund’s losses are potentially large in a written put or call transaction. If unhedged, written calls expose the Fund to potentially unlimited losses. The Fund invests in derivatives. Derivatives are financial instruments that derive their performance from an underlying reference asset, such as an index. The return on a derivative instrument may not correlate with the return of its underlying reference asset. Derivatives can be volatile and may be less liquid than other securities.
Shares are bought and sold at market price (not NAV) and are not individually redeemed from the Fund. Investors may purchase or sell individual shares on an exchange on which they are listed. Market returns are based upon the midpoint of the bid/ask spread at 4:00 p.m. Eastern time (when NAV is normally determined for most ETFs), and do not represent the returns you would receive if you traded shares at other times. Please see the prospectus for more details.
The Syntax Stratified LargeCap Index™ is the property of Syntax, LLC, which has contracted with S&P Opco, LLC (a subsidiary of S&P Dow Jones Indices LLC) to calculate and maintain the Index. The Index is not sponsored by S&P Dow Jones Indices or its affiliates or its third-party licensors (collectively, “S&P Dow Jones Indices”). S&P Dow Jones Indices will not be liable for any errors or omissions in calculating the Index. “Calculated by S&P Dow Jones Indices” and the related stylized mark(s) are service marks of S&P Dow Jones Indices and have been licensed for use by Syntax, LLC, the parent company of Syntax Advisors, LLC. S&P® is a registered trademark of Standard & Poor’s Financial Services LLC (“SPFS”), and Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”).
The Syntax Stratified LargeCap Index™ is the property of Syntax, LLC, the Fund’s index provider. Syntax®, Stratified®, Stratified Indices®, Stratified Weight™, and FIS™ are trademarks or registered trademarks of Locus LP. Performance of an index is not illustrative of any particular investment. It is not possible to invest directly in an index.
Stratified Weight™ is the weighting methodology by which Syntax diversifies an index’s constituent companies that share “Related Business Risks.” Related Business Risk occurs when two or more companies provide similar products and/or services or share economic relationships such as having common suppliers, customers or competitors. The process of identifying, grouping, and diversifying holdings across Related Business Risk groups within an index is called stratification, and was designed by Syntax to seek to correct for business risk concentrations that regularly occur in capitalization-weighted indices and equal-weighted indices.
The Stratified Hedged Strategy combines the benefits of exposure to a Stratified Weight™ equity portfolio with a rules-based protection program managed by Exchange Traded Concepts to reduce the risk of losses due to market downturns.
Diversification does not ensure a profit or guarantee against a loss.
The S&P 500® Index is a market-capitalization-weighted index of the 500 leading publicly traded companies in the U.S.
© Copyright 2025 Exchange Traded Concepts | All Rights Reserved