TL:DR: Our latest video is out! Click here to watch. 

You own an S&P 500 index fund, don’t you? 

I knew you did.

I knew b/c nearly half of American investors own an index fund, and S&P 500 index funds are likely the most-held of that batch. SPY and VOO are my two largest equity holdings, in fact. 

But within those allocations, I’m putting all my eggs in the market cap basket – a strategy that’s mostly worked over time, but which a) seems riskier than average now with the Mag 10 making up more than 40% of the S&P 500, and b) has actually underperformed an equal-weight S&P 500 allocation over time. 

None of this is news to Carlos Diez, founder of MarketGrader, and my interview guest. Carlos makes alternative indexes, which feed ETFs like the Barron’s 400 ETF (Nasdaq: BFOR), and which wealth managers use to invest their high-net work clients’ assets. 

Rather than just market capitalization, Carlos’ indexes – there are more than 100 of them, spanning industry and geography – use 24 mostly fundamental factors (things like quality, growth, value, and profitability) to capture a more factor-robust framework that’s less jumpy and vulnerable to being thrown off kilter. 

The result? 92% of MarketGrader's alternative indexes are currently beating their benchmarks.

In our chat, Carlos breaks down how cap-weighted indexing creates concentration risk (technology was 56% of the Barron 400 index by market cap — but just 16% by equal weight), why the shrinking number of public companies is an underappreciated threat to investors, and how he’s investing in the AI revolution without trying to pick winners.

Watch the full interview here or by clicking the image below.