3 ETF Picks That Could Help You Sidestep the AI Market Top

The artificial intelligence boom has created unprecedented market dynamics. While AI stocks continue their remarkable ascent, the S&P 500—traditionally viewed as a diversified benchmark—has become increasingly concentrated in technology names. This concentration raises legitimate concerns about market vulnerability, particularly if growth expectations for AI-related companies shift.

Savvy investors are exploring alternative avenues to maintain market exposure without being overly dependent on tech-driven momentum. The solution lies in dividend-focused and sector-specific exchange-traded funds that offer genuine diversification and reduced technology sector overlap.

Capturing Dividends While Sidestepping Tech Concentration

The Vanguard High Dividend Yield Index Fund ETF (VYM) stands out as a portfolio stabilizer for those seeking both income and risk mitigation. With a dividend yield of 2.4%—more than double the S&P 500’s average 1.1%—this fund delivers meaningful income. Its portfolio spans 566 holdings across multiple sectors, with financials at 21% and technology at just 14%. Notably, among its top five positions, only Broadcom represents the technology space. The fund’s 0.06% expense ratio is negligible given the breadth of diversification and regular dividend payouts. Year-to-date performance has reached 13%, demonstrating that defensive positioning doesn’t mean sacrificing returns.

Revenue-Based Weighting: A Different S&P 500 Approach

The Invesco S&P 500 Revenue ETF (RWL) reimagines index fund construction by weighting components based on revenue generation rather than market capitalization. This fundamental shift produces a dramatically different portfolio composition. Top holdings feature names like Walmart, McKesson, and UnitedHealth—companies that generate massive revenue streams independent of AI narratives. Technology’s footprint shrinks to just 12%, while healthcare emerges as the dominant sector at 21%. Despite a slightly elevated 0.39% expense ratio, the reduced tech exposure justifies the cost premium for risk-conscious investors. This year’s 17% gain, combined with a 1.3% yield, demonstrates that revenue-focused strategies can deliver competitive results during tech bubble concerns.

Pure Defensive Play: Consumer Staples Focus

For investors seeking complete insulation from technology volatility, the State Street Consumer Staples Select Sector SPDR ETF (XLP) offers zero tech exposure. This fund concentrates exclusively on consumer staples companies—enterprises selling everyday essentials that maintain steady demand regardless of economic cycles. Walmart, Costco, and Procter & Gamble form the portfolio’s foundation, collectively representing 29% of holdings. These blue-chip names typically exhibit stability and regular dividend distributions, reflected in the ETF’s 2.7% yield. While 2025’s performance has been modest at under 1%, the dividend cushion matters significantly. Moreover, if market participants eventually reassess AI valuations, a rotation into defensive consumer staples could accelerate this fund’s upside potential. The 0.08% expense ratio makes this a cost-efficient hedge.

Building Resilience in an Unbalanced Market

The proliferation of AI-focused investment products has reshaped market structure in ways that concern many portfolio managers. These three ETFs provide concrete alternatives for investors uncomfortable with current technology concentration levels. Whether prioritizing income through high dividend yields, seeking alternative weighting methodologies, or opting for pure defensive characteristics, each fund addresses different risk tolerances while maintaining meaningful market participation. In periods when speculative excess reaches unsustainable levels, such diversified, dividend-oriented strategies often prove their worth.