ETFHeaeder

ETFs: the lazy investor’s serious tool

Equities 5 minutes to read
Ruben Dalfovo
Ruben Dalfovo

Investment Strategist

Key takeaways

  • ETFs can help investors spread risk without trying to pick every future winner.

  • Saxo client behaviour suggests diversified investors have often had better odds of profitable outcomes.

  • ETF investing still requires checking what sits inside the basket.


Markets have been kind to investors, but not evenly kind. Over the past five years, many major equity indices have moved higher, helped by artificial intelligence, technology and a handful of very large companies. That is good news, unless your portfolio missed the party because it was waiting outside with the wrong invitation.

major-global-index-performance-5-years-jun-2021-0
Source: Bloomberg. Chart generated using ASKB by Bloomberg AI. Five-year performance as of 23 June 2026. Returns are shown in local currency terms. Past performance is not a reliable indicator of future results.

This is where diversification matters. It is one of the simplest ideas in investing: do not let one company, one sector or one country decide too much of your financial future. Simple does not mean easy. Investors still love the idea of finding the next Nvidia, ASML or Amazon. Fair enough. Unfortunately, the next winner rarely introduces itself politely in advance.

Exchange-traded funds, or ETFs, offer a practical middle road. An ETF is a fund that trades on an exchange like a share. Instead of buying one company, investors can buy a basket of securities in one transaction. That basket can hold global shares, US equities, European companies, bonds, commodities, emerging markets or a specific theme.

The promise is not magic. It is structure. ETFs can make it easier to participate in market growth without relying on one perfect stock pick.

The market is broad, but the leadership is not

A global equity chart can look beautifully simple. Lines go up, investors smile, and everyone briefly feels like a genius. Underneath, the story is usually messier.

In recent years, large US technology companies have become a bigger part of major indices. That means a broad index can still have a strong tilt towards a small group of companies. The S&P 500, for example, owns around 500 leading US companies, but its largest names carry much more weight than smaller members. A broad basket can therefore be diversified in name, while still leaning heavily on the same few engines.

This does not make ETFs bad. It makes understanding them important. A global equity ETF may still have a large US weighting. A US equity ETF may still have a large technology weighting. A technology ETF may be efficient, but it is not a balanced meal. It is more like ordering chips with chips. Enjoyable, but not exactly diversified.

The lesson is practical. Investors should not only ask: “Do I own ETFs?” They should ask: “What do my ETFs actually own?”

Why ETFs help ordinary investors stay in the game

Saxo client behaviour points to a useful pattern. Without turning private data into a scoreboard, the broad message is clear: clients using a mix of stocks and ETFs have generally shown better profitability outcomes than clients relying only on single stocks. ETF-only portfolios have also shown a higher likelihood of profitable outcomes than stock-only portfolios, though average profit per client can be lower.

That makes intuitive sense. A single stock can deliver spectacular returns, but it can also disappoint spectacularly. Recent volatility in names such as Tesla, Novo Nordisk and Rheinmetall reminds investors that even great stories can move sharply when expectations change.

ETFs reduce company-specific risk. That means one earnings miss, product delay or regulatory surprise is less likely to dominate the whole portfolio. The trade-off is that investors usually give up some upside from picking one exceptional winner. Diversification is not designed to make investors look brilliant at dinner. It is designed to keep the portfolio alive through different market weather.

The same pattern appears at instrument level. Saxo data suggests clients have been profitable on a higher share of ETF instruments than ordinary stock instruments. That does not prove ETFs are always better. Market timing, risk appetite and client behaviour matter. But it does support a common-sense point: spreading risk can improve the odds.

What Saxo clients are buying

The most used ETFs among Saxo clients in 2025 show a clear theme: investors are not only chasing growth. They are also looking for bonds, income, inflation protection, global exposure and commodities. That is healthy. A portfolio with more than one job usually sleeps better.

Chart2Clients

The risks are still real

ETFs can reduce single-company risk, but they do not remove market risk. A global equity ETF can still fall in a bear market. A bond ETF can lose value when interest rates rise. A high-yield bond ETF can suffer when investors worry about company defaults. A thematic ETF can be very concentrated, even if it owns many names.

The early warning signs are simple to watch. First, check whether several ETFs own the same top companies. Second, watch whether one sector dominates the portfolio. Third, look at bond duration, which measures sensitivity to interest-rate moves. Long-duration bond funds can be more volatile when yields rise.

A simple investor playbook

  • Use broad ETFs as building blocks, not as decoration.

  • Check the top holdings before assuming you are diversified.

  • Combine regions, sectors and asset classes when it fits your time horizon.

  • Keep single stocks sized so one mistake does not define the portfolio.

The basket still matters

Diversification starts with a humble idea: do not put all your eggs in one basket. ETFs make that easier, but they do not remove the need to inspect the basket. Some baskets hold hundreds of different eggs. Others hold many versions of the same egg, painted slightly differently.

For investors, that is the real lesson. ETFs can help investors join market growth, reduce company-specific risk and build portfolios with less drama. They are not a shortcut around thinking. They are a shortcut around needing to be right about every single company. In investing, that may be one of the most underrated comforts available.

 

This material is marketing content and should not be regarded as investment advice. Trading financial instruments carries risks and historic performance is not a guarantee of future results.

The instrument(s) referenced in this content may be issued by a partner, from whom Saxo receives promotional fees, payment or retrocessions. While Saxo may receive compensation from these partnerships, all content is created with the aim of providing clients with valuable information and options.

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