With over 3,000 holdings under the hood, you would expect this broad Emerging Markets giant to offer the ultimate form of diversification. But if you look closely at the allocations today, one massive outlier immediately jumps out:
Taiwan Semiconductor Manufacturing Co. $2330) now makes up over 12% of the entire index.
To put that into perspective, the number two holding (Samsung) hovers around 5% to 6%, and after that, the weights drop below 3% very quickly. Because the semiconductor sector has experienced such an explosive run over the last couple of years fueled by the AI revolution TSMC’s massive growth has given it an unprecedented footprint in the index.
This raises an important question for long-term index investors:
Is a 12% weight for a single company in an emerging markets fund simply too high?
