309. Hidden risks inside your index funds. Are your funds as passive as you think?

Index funds are often sold on one big idea: diversification. But owning hundreds of companies does not always mean your money is spread as evenly as you think.

Tash and Jack take a closer look at what can sit underneath a seemingly simple ETF. They unpack concentration risk, overlapping funds and the point where a “passive” portfolio can start looking surprisingly active.

In this episode:

📊 Why owning hundreds of companies does not automatically mean your portfolio is evenly diversified

💻 How a small group of large US companies can make up a sizeable part of a market-cap weighted index

🏦 Why Australian index funds can leave investors heavily exposed to banks and mining companies

🧩 How owning several ETFs can create overlap rather than adding meaningful diversification

🌏 Why a fund labelled “global” can still have a large exposure to the US market

🎯 How adding thematic, sector or specialised ETFs can turn a passive strategy into a form of active portfolio management

🔥 Why investors can be tempted to add an asset or sector after it has already had a strong run

⚖️ The arguments for passive and active investing, including the role active investors play in setting market prices

🗳️ What happens to shareholder voting power when large investment managers hold shares on behalf of millions of investors