NEW YORK, January 20, 2026, 10:42 EST
- Major U.S. equity ETFs dropped in morning trading amid a widespread selloff in stocks.
- Vanguard’s S&P 500 fund VOO fell, tracking losses in the tech-heavy QQQ and equal-weight RSP.
- New tariff news linked to Greenland reignited the debate over whether ETFs should focus on concentrated or diversified holdings.
Vanguard’s S&P 500 ETF (VOO) dipped 1.16% to $628.71 Tuesday morning, with investors stepping away from riskier bets. Invesco QQQ Trust (QQQ) fell 1.32% to $613.09, and the Invesco S&P 500 Equal Weight ETF (RSP) declined 0.70% to $197.65.
Wall Street’s key indexes dropped sharply after President Donald Trump announced a new 10% import tariff kicking in Feb. 1 on goods from eight European nations, with a hike to 25% set for June 1. The tariffs are linked to tensions over Greenland. By 9:39 a.m. ET, the Dow was off 1.23%, the S&P 500 down 1.29%, and the Nasdaq fell 1.56%. The CBOE Volatility Index hit a two-month peak, Reuters reported. “We’re seeing weakness because the headlines are fueling anxiety about what lies ahead,” said David Lundgren, chief market strategist at Little Harbor Advisors. (Reuters)
ETF investors face tricky timing. Big index funds act as quick money parking spots for traders and long-only players, so sharp moves quickly reveal what kind of exposure you actually hold — whether it’s broad S&P 500, tech-heavy growth, or a mix designed to temper the largest names.
A TipRanks daily note reported VOO slipping about 1.3% in pre-market trades, holding mostly steady over the last five sessions. It’s still ahead by 14.7% for 2025. The firm rated VOO a “Moderate Buy” based on a weighted average of analyst ratings on its components. Analysts set an average price target of $746.80, suggesting roughly 17.4% upside. TipRanks put VOO’s yield at 1.11%, highlighting ServiceNow, Datadog, The Trade Desk, Oracle, and GoDaddy as top picks for upside potential. On the downside, Amcor, Moderna, SanDisk, Lennar, and Huntington Ingalls were flagged as the riskiest names. (TipRanks)
Motley Fool contributor Geoffrey Seiler highlighted VOO as a solid choice for investors looking to build a “core holding,” noting its low 0.03% expense ratio — the annual fee charged by the fund — and its goal of tracking the market-cap weighted S&P 500. In this type of index, the biggest companies have the most influence, which can pay off when the market leaders perform well, but can also hurt when they falter. (The Motley Fool)
VOO’s key competitors tracked closely. State Street’s SPDR S&P 500 ETF (SPY) slipped 1.16% to $683.63, while BlackRock’s iShares Core S&P 500 ETF (IVV) declined 1.12% to $686.89.
Motley Fool’s comparison of QQQ and RSP highlights the trade-offs, even though both are large and liquid funds. QQQ’s expense ratio stands at 0.18%, slightly lower than RSP’s 0.20%. Dividend yields are 0.4% for QQQ and 1.6% for RSP. Assets under management show a stark contrast: about $412.7 billion for QQQ versus $78.7 billion for RSP. The article also notes “beta” — a volatility measure against the S&P 500 — at 1.15 for QQQ and 0.96 for RSP. Looking at max drawdown over five years, QQQ dropped as much as 35.12%, while RSP’s biggest dip was 21.37%. From a $1,000 start, five-year growth was $1,993 for QQQ and $1,506 for RSP. RSP holds roughly 505 stocks, each weighted evenly through rebalancing, while QQQ’s portfolio is more concentrated, with technology making up over half and Nvidia, Apple, and Microsoft alone accounting for more than 23% of assets. (The Motley Fool)
Put simply, equal-weight funds spread their bets evenly across all stocks, whereas market-cap weighted funds favor the largest companies because of their size.
The downside is baked in either way. If a tight cluster of mega-cap winners keeps pushing ahead, equal-weight funds may lag despite wider diversification. But if trade shocks hit or earnings disappoint, that concentrated tech exposure can turn a few rough days into a deeper drop.
The next trigger is political and complicated — will tariff threats actually become policy, and will Europe retaliate? Until that shakes out, investors might continue facing the same tough lesson: “S&P 500 exposure” isn’t a single bet anymore, and “diversification” has shifted meaning too.
