Not Too Many, Not Too Few: The Logic Behind 50 Stocks
When it comes to building a portfolio, investors often face a classic tension: should they hold a wide array of stocks to maximize diversification, or narrow the list to focus on conviction?
At Core16, we believe the best answer may lie somewhere in between. That’s why the Core16 Best of Breed Premier Index ETF (BOBP) is designed around a curated 50-stock portfolio - a structure that seeks to balance concentration with diversification and aiming to deliver both stability and clarity for investors.
Why 50 Stocks?
The number 50 wasn’t chosen at random. The index is built to capture the top 10% of large-cap companies from a universe of roughly 500 names. This means only the strongest performers, according to our rigorous data-driven methodology and Gainers-to-Losers Indicator, earn a place in the portfolio. Our design philosophy and empirical data confirms that this number strikes the right balance: it avoids excessive diversification while still seeking to provide meaningful breadth across industries.
With 50 holdings, each stock matters. Each company represents a deliberate choice, not just another name to fill space. This level of concentration aims to ensure that investors benefit from exposure to the potentially optimal performers while still maintaining a level of diversification that reduces being overly dependent on a handful of positions.
How The Core16 Best of Breed Premier Index* Differs from the S&P 500**
The S&P 500 Index is often the default benchmark for U.S. equities, but with 500 constituents, exposure to any single company is relatively diluted. That means signals and sources of strength may easily get lost. By contrast, the 50-stock portfolio in BOBP assigns more meaningful weight to each name, aiming to allow performance drivers to come through more clearly.
Another key difference lies in methodology. Unlike sector-based approaches, the Core16 Best of Breed Premier Index is sector-agnostic. Exposures shift dynamically to wherever relative strength is found whether that’s technology, financials, industrials, or another area of the market. This design may lead to a higher tracking error compared with the S&P 500, but it seeks to ensure the portfolio consistently reflects the strongest opportunities according to our Gainers-to-Losers Indicator, rather than mirroring broad market weights.
What This May Mean for Investors
For investors, a curated 50-stock portfolio may offer several distinct points:
- Clarity and focus: With fewer holdings, it’s easier to understand what drives performance.
- Conviction in quality: Every company in the portfolio earns its spot through consistent data-backed strength.
- Diversification without dilution: Exposure is spread across sectors, but without the “closet indexing” effect of holding hundreds of immaterial positions.
- Selectivity: Each holding potentially represents genuine leadership, not just a placeholder.
By focusing on 50 names, BOBP seeks to provide a portfolio that is selective but not narrow, concentrated yet diversified. It’s built to capture possible strength and deliver a more transparent path to performance.
The Core16 Difference
At Core16, the belief is that a portfolio should be structured with intention. It’s not about holding more stocks. It’s about focusing on the ones that meet clearly defined criteria.
An Index Built on Selectivity, Not Excess.
Holdings are subject to change. Please click HERE to view Fund’s current holdings.
* The Core16 Best of Breed Premier index - Selects 50 U.S. large-cap equity securities through a proprietary, quantitative scoring methodology that aims to filter market noise and short-term volatility.
** The S&P 500 is a stock market index weighted by market capitalization that is made up of 500 of the largest public companies in the United States.
Investors should consider the investment objectives, risks, charges and expenses carefully before investing. For a prospectus or summary prospectus with this and other information about the Fund, please call 1-833-462-3466 or visit our website at www.core16etf.com. Read the prospectus or summary prospectus carefully before investing.
The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.
Diversification does not ensure a profit and cannot protect against losses in a declining market.
Indexes are unmanaged, do not incur management fees, costs and expenses, and cannot be invested in directly.
Asset allocation strategies do not ensure a profit and do not protect against losses in declining markets.
Investment returns will fluctuate and are subject to market volatility, so that an investor’s shares, when redeemed or sold, may be worth more or less than their original cost. Shares of ETFs are bought and sold at market price (closing price) not net asset value (NAV) and are not individually redeemed from the Fund. Brokerage commissions will reduce returns.
Exchange Traded Concepts, LLC serves as the investment advisor of the fund. SEI Investments Distribution Co. (SIDCO, 1 Freedom Valley Drive, Oaks, PA 19456) serves as the distributor for the BOBP ETF, which is not affiliated with Exchange Traded Concepts, LLC, or any of its affiliates.
Risk Disclosures:
Investing involves risk, including possible loss of principal. The fund is subject to risks including, but not limited to, passive investment risk, index tracking risk, authorized participant concentration risk, cybersecurity risk, equity investing risk, and large-capitalization risk. The Fund will be concentrated in an industry or a group of industries. This may subject the Fund to greater market risk than a fund that is more broadly diversified. BOBP is non-diversified. An investment in the Fund is not a bank deposit and is not insured or guaranteed by the FDIC or any government agency.
The Core16 Best of Breed Premier Index (the “Index”) is a systematically constructed, rules-based index designed to measure the performance of 50 securities selected from the U.S. large-cap universe using Core16’s proprietary algorithm. The Index dynamically adjusts its selection logic based on market signals, adapting the type of securities it includes according to prevailing market conditions. It also maintains a flexible allocation between selected securities and cash to enhance risk-adjusted returns. The Index serves as a benchmark for a passively managed Exchange-Traded Fund (ETF).
