**Are Active ETFs Worth the Higher Cost? Here’s What Investors Need to Know**

Investors are paying more for active ETFs compared to traditional passive index funds. But with big tech and artificial intelligence (AI) stocks dominating the S&P 500, many people are starting to question if it’s time to rethink their investment strategy.

Right now, a small group of nine major tech companies—including giants like Apple, Microsoft, and Nvidia—make up nearly 40% of the S&P 500’s total value. These companies are even larger than Warren Buffett’s Berkshire Hathaway in terms of index weight. This heavy concentration in a few tech names has created new risks for investors who have always believed in the “never bet against America” mantra.

To reduce this risk, more investors are looking for alternatives outside of stocks. Many are turning to cash, gold, and cryptocurrency as ways to protect their portfolios from market volatility. These assets don’t move in the same direction as tech stocks, making them useful for diversification.

According to Todd Sohn, a senior ETF and technical strategist at Strategas Securities, ETFs focused on cash, precious metals, and crypto are seeing big inflows. He explained on CNBC that mainstream investors are starting to adopt these types of assets more regularly.

Sohn points out that people are realizing their portfolios are too heavily invested in tech and AI. To balance things out, they’re putting small amounts into uncorrelated assets like gold and crypto.

While some experts suggest bold moves like a 60-20-20 portfolio (60% stocks, 20% bonds, 20% alternatives), most investors are still playing it safe with modest allocations. Typically, advisors recommend allocating about 1–3% of a portfolio to crypto and 3–7% to gold.

Gold has had a strong year overall despite some recent sell-offs. It’s up over 60% this year, reaching record highs above $4,400 per ounce. This surge has been driven by central banks buying gold, concerns about a weakening U.S. dollar, and ongoing global tensions. These are all part of what’s called the “debasement trade,” where investors buy assets that hold value when fiat currencies lose purchasing power.

The SPDR Gold Shares ETF (GLD), one of the most popular gold funds, saw around $6.8 billion in inflows just in the past month. Overall, gold ETFs are close to hitting $40 billion in net inflows this year.

Cryptocurrency is also gaining traction as a hedge. Although Bitcoin’s return this year is around 17%, which is lower than gold’s performance, its role in investment portfolios is growing. Ethereum has gained around 15%. The launch of spot Bitcoin ETFs has helped bring more institutional investors into the crypto space. For example, the iShares Bitcoin Trust (IBIT) is one of the largest spot Bitcoin ETFs with nearly $90 billion in assets under management.

ETFs have made it easier for investors to access these alternative strategies. Since launching in 1993 with large-cap stock exposure, ETFs have expanded to cover gold, emerging markets, and more recently, products focused on income generation and derivatives.

Today, investors can use ETFs to build portfolios that go beyond just stocks and bonds. They can include covered call strategies, high-yield opportunities, or even exposure to digital assets like Bitcoin and Ethereum—all within a regulated framework.

Thanks to these innovations and rapid developments in the ETF market, investors now have more tools than ever to manage risk and seek returns outside of traditional investments. Whether it’s precious metals or cryptocurrencies, these alternative assets are becoming a key part of modern investment strategies.