What’s inside your ETF? A beginner’s guide to ETF holdings

Exchange-traded funds (ETFs) are one of the simplest ways to build an investment portfolio. But have you ever wondered what is actually inside the ETF you are buying?

In this guide, we explain what goes into an ETF. You’ll learn how ETFs track indices or follow specific rules to determine their holdings, why transparency matters, and how to use this information to make more informed investment decisions.

What are ETF holdings?

When you invest in an ETF, you are not buying just one company or one bond. You are buying a basket of investments.

ETFs are (mostly) designed to track an index. This means that the composition of an S&P 500 ETF, for example, will be built to replicate the performance of the real S&P 500.

The contents of that basket are called the ETF’s holdings and these typically align closely with the instruments of the index that the ETF is replicating. These can include:

Shares in companies
Government or corporate bonds
Commodities
Cash
Or a mix of different asset types

The mix depends on the ETF’s purpose. For example, a global equity ETF may hold the stock of thousands of companies across different regions, while a UK government bond ETF may hold only UK government bonds.

Why ETF holdings matter

Knowing what an ETF holds helps you:

Understand your portfolio

You might think your investments are well diversified. However, if a number of your ETFs hold the stock of the same big companies or regions, your investment may be more concentrated than you realise.

Check for alignment with your goals

Long-term growth ETFs tend to hold more equities. Income-focused ETFs may hold bonds or dividend-paying stocks. Thematic ETFs (for example AI or clean energy) target specific sectors or themes.

Assess risks

If an ETF is heavily weighted towards one sector, region, or a few companies, your returns may depend on the fortunes of that area.

This is why ETF transparency is so valuable. Unlike some traditional funds, ETFs publish their holdings daily.

How ETF issuers choose their ETF holdings

Most ETFs are built on a framework called an index methodology. While this may read like a technical document, it serves a critical purpose: it defines how index components are selected and weighted. For ETF investors, this methodology is the most detailed blueprint of the investment strategy being tracked. This defines:

What the ETF is is likely to invest in
How companies or bonds are selected
How large each holding should be
When the ETF rebalances

For example:

Market-cap weighted ETFs

These hold companies in proportion to their market size. Larger firms take up a bigger share in the index.

Equal-weight ETFs

Every company is given the same weight, regardless of size or market capitalization. Every stock, whether large or small, gets equal opportunity to contribute to the overall return and as weights drift over time, they are reset in frequent rebalancings

Thematic ETFs

These select companies involved in a specific trend or industry, such as artificial intelligence, robotics, clean energy, or cybersecurity.

Bond ETFs

These hold a basket of bonds that meet certain criteria, such as maturity range, government vs corporate, or credit rating.

How the experts build ETFs

Here’s Lukas Ahnert, Senior Product Specialist at Xtrackers by DWS, who are at the forefront of the ETF industry.

“At Xtrackers, our mission is to inspire everyone to invest in their future well-being. We provide the tools and strategies needed to build resilient portfolios, manage risk effectively, and achieve long-term objectives. Our ETF range is designed with this purpose in mind – spanning broad market exposures through to highly specialised strategies in high-growth segments and targeted market access. This breadth enables investors to construct portfolios with a level of precision and flexibility that was simply not possible a decade ago.

The advantages of Xtrackers ETFs can be captured in three words: efficient, transparent, flexible. With our extensive range, investors can combine broad diversification with precise building blocks – creating portfolios that support sustainable long-term allocations, while retaining the agility to adapt proactively as market conditions evolve.”

Lukas Ahnert, Senior Product Specialist, Xtrackers by DWS

What do ETF holdings look like in practice?

So, what do ETF holdings actually look like? Looking at the InvestEngine app, for example, the holdings of an ETF are shown with:

Company or asset name
Sector
Region
Weighting (%) in the ETF

It is normal for the top 10 holdings to make up a significant chunk of an equity ETF, especially in popular indices like the S&P 500 or FTSE 100 where a handful of companies are very large.

Bond ETFs tend to be more evenly spread because each individual bond is a smaller part of the market.

How to view ETF holdings on InvestEngine

InvestEngine gives you clear, easy-to-understand breakdowns of your ETF holdings through the Portfolio Look-Through tool. This lets you see:

The sectors you’re invested in
The regions that make up your portfolio
The asset classes you’re invested in

This is especially useful if you hold several ETFs, as it lets you check whether you’re unintentionally over-invested in any particular company or sector.

For DIY investors, this can help you build a balanced mix of ETFs.

Understanding ETF weighting

ETF ‘weightings’ mean how much of the ETF is invested in each individual asset that makes it up.

So, your ETF might have more invested in a major tech company than another smaller member of the S&P 500. This is often (but not always) to reflect their larger contribution to that index.

Weightings change over time as markets move (i.e. as some companies grow more than others, their portion of an index will grow)..

Usually, ETFs automatically rebalance the percentages in their holdings to stay as close to their index as possible. This can help you maintain your approach without having to micro-manage the balance of your investment portfolio yourself.

Investors may still need to rebalance their portfolios every so often, however. This is to make sure the weightings in your portfolio haven’t deviated too much from your original set up over time. ETFs will rebalance themselves, but your portfolio – often having multiple ETFs – will need rebalancing yourself.

How often ETF holdings change

Most index-based ETFs update their holdings when the index rebalances. This could be quarterly, semi-annually, or annually depending on the index.

Some ETFs may rebalance more regularly, especially factor ETFs or active ETFs.

Although holdings change, transparency ensures you can always see where your money is invested.

Key things beginners should look out for

Here are simple checks when reviewing an ETF’s holdings:

1. Concentration

Are a few companies taking up a large share of the ETF? This is common in US tech-heavy indices.

2. Overlap

Do two ETFs you own hold many of the same companies? This reduces diversification.

3. Region mix

If you want global exposure, check it’s not dominated by one region.

4. Sector mix

Some ETFs lean heavily towards tech, finance, or energy. Make sure it aligns with your goals.

5. Costs

ETF charges vary. Most broad market ETFs remain low cost.

ETF holdings: a simple way to invest without picking stocks

ETF holdings are important, but you do not need to analyse every line. The main benefit of ETFs is that they spread your money across many investments automatically.

For beginners, they offer:

Lower risk through broader diversification compared to picking individual stocks
Transparency over where your money goes
Usually low ongoing costs

And with InvestEngine, you can invest in a wide range of commission-free ETFs (ETF costs do apply), automate your contributions with Savings Plans, and view your full portfolio composition at any time.

Final thoughts

Understanding what is inside your ETF is a great way to build confidence as an investor. You don’t need expert knowledge. Just a basic sense of what your ETFs hold and how they fit into your wider portfolio.

ETFs make diversified investing simple, and tools like Portfolio Look-Through on InvestEngine help you stay informed and in control.

FAQs on ETF holdings

1. What are ETF holdings? ETF holdings are the individual investments inside an exchange traded fund. Instead of buying one company or bond, you buy a basket that might include shares, bonds, commodities, cash or a mix of these. The exact mix depends on the investment objective the ETF follows.

2. Why is it important to check what an ETF holds? Knowing an ETF’s holdings helps you understand your diversification, check whether it aligns with your goals, and assess any risks. It also helps you spot overlaps between ETFs if you own more than one. ETFs are transparent and publish their holdings daily.

3. How do ETFs decide what to invest in? Most ETFs follow an index methodology. This sets rules on what the ETF can buy, how companies or bonds are chosen, how much each investment should count towards the ETF, and when the ETF should rebalance.

4. What does ETF ‘weighting’ mean? Weighting shows much of the ETF is invested in each individual asset that makes it up. For example, one tech giant might be 4.8% of a global equity ETF. Weightings change as markets move, and most ETFs rebalance automatically to stay in line with their index.

5. Do ETF holdings change often? Many ETFs update their holdings when their index rebalances. This could be quarterly, semi-annually, or yearly. Some factor or active ETFs adjust more frequently. Even as holdings change, ETFs remain transparent about the updates.

6. What is concentration risk in an ETF? Concentration risk is when a small number of companies, sectors or regions make up a large share of the ETF. This can increase risk because performance may depend heavily on that area. Some of the larger US indices tend to be heavily reliant on the tech sector, for example.

7. How can I check if my ETFs overlap? On InvestEngine, the Portfolio Look-Through tool shows which companies, regions and sectors you hold across all your ETFs. This helps you spot unintentional overlap and makes sure you are genuinely diversified.

8. What do ETF holdings look like on a factsheet? You will usually see the company or asset name, its sector, region and its weighting in the ETF. Equity ETFs often have a top-10 list that makes up a significant share of the fund. Bond ETFs tend to be more evenly spread.

9. Do I need to analyse every holding before buying an ETF? Not necessarily. For beginners, the main benefit of ETFs is instant diversification. A basic understanding of the ETF’s purpose, sectors, regions and top holdings is usually enough to make an informed decision.

10. Where can I see my ETF breakdown on InvestEngine? InvestEngine’s Portfolio Look-Through tool gives a clear view of your holdings by sector, region and industry. This helps you understand your mix of ETFs and build a balanced long-term portfolio.

Important information

Capital at risk. The value of your portfolio with InvestEngine can go down as well as up and you may get back less than you invest. ETF costs also apply.

This communication is provided for general information only and should not be construed as advice. If in doubt you may wish to consult a professional adviser for guidance.

Tax treatment depends on personal circumstances and is subject to change, and past performance is not a reliable indicator of future returns.

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