How much of the S&P 500 does Nvidia (NVDA -0.36%) make up and how exposed are you through your S&P 500 index fund? Theoretically, all S&P 500 index funds should have the same proportions of assets invested in each stock, so let's take a look at the Vanguard S&P 500 ETF (VOO -0.39%).

I won't keep you in suspense. According to Vanguard's website, the Vanguard S&P 500 ETF has 6.1% of its assets invested in Nvidia stock.

One caveat is that this data is as of May 31 and the price of Nvidia is up by about 15% since that time, through June 21. Since the S&P 500 is a weighted index, this implies that the concentration of Nvidia in S&P 500 index funds could be significantly higher than the latest portfolio data indicates by the time the end-of-June updates are revealed. Based on a 15% gain in the stock, this means the likely allocation is about 7%.

What to do if you want more exposure to Nvidia?

If you believe in Nvidia as an excellent long-term investment and want more exposure, the obvious way to get it is to buy the stock directly. However, owning individual stocks isn't right for everyone, so let's look at a couple of ways you can accomplish this in the ETF world.

As one option, you can choose a more tech-focused index fund. The Invesco QQQ Trust (QQQ -0.52%) is one example. The ETF tracks the Nasdaq 100 index, and as of June 18 had a significantly higher 8.69% Nvidia allocation.

Another option is the Roundhill Investments Magnificent Seven ETF (MAGS -1.53%), which has exposure to Nvidia as well the other six mega-cap tech stocks. This fund offers equal-weight exposure to Apple (AAPL -1.62%), Amazon.com (AMZN -2.33%), Meta Platforms (META -2.95%), Tesla (TSLA 0.23%), Microsoft (MSFT -1.30%), Alphabet (GOOGL -1.76%) (GOOG -1.84%), and of course, Nvidia. This implies that about 14.3% of the fund will be allocated to Nvidia at any given time, although it can fluctuate a bit in the short term.

What to do if you want less exposure?

On the other hand, let's say that having 7% of your money invested in Nvidia is a little too much for your comfort zone. Here are three ETF alternatives that can help you reduce your exposure.

If you still want S&P 500 exposure but without the mega-cap concentration, the Invesco S&P 500 Equal Weight ETF (EWI -0.08%) could be a great fit. It divides investors' money evenly among the 500 companies in the index, so its allocation to any stock, even Nvidia, is always set at just 0.2%.

If you don't want to reduce it that much, the Vanguard Total Stock Market ETF (VTI -0.34%) could be worth a look. Instead of investing in just the S&P 500, the fund has over 3,700 stocks, including mid- and small caps. It's still a weighted index, but the added holdings bring the Nvidia exposure down to 5.1%.

Finally, another way to go would be to add some index funds without any Nvidia exposure at all. The dividend-focused Vanguard High Dividend Yield ETF (VYM 0.24%) and the Vanguard Value Index Fund ETF (VTV 0.29%) are two good examples.

The bottom line

One of the biggest issues with index fund investing, especially when it comes to the S&P 500 and Nasdaq, is the weighted nature of these benchmarks. Many investors believe the S&P 500 is a diversified investment vehicle, while the mega-cap tech stocks make up a disproportional amount of the fund's assets. If you're a big believer in Nvidia and its big-tech counterparts, this can be a good thing. But if you read this article and are surprised at how much exposure you have, taking steps to diversify could be a smart idea.