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Roth IRA Concentration Risk

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32 yo with 85% of Roth IRA in VUG/XMMO. Is this too concentrated? should I sell and buy broad index?

Short answer: yes, it's more concentrated than you probably think, but "sell everything and buy VTI" isn't automatic. Here's the read.

Diagnosis

Yes, this is concentrated — just not in the way "2 ETFs" suggests.

VUG: 53% Technology + 16% Communication Services + 12% Consumer Cyclical = ~81% in three sectors. Top 10 names (MSFT, AAPL, NVDA, AMZN, META, GOOGL, etc.) typically run ~55%+ of the fund. It's a large-cap growth bet.
XMMO: 40% Industrials, 14% Tech, ~8% each Energy/Cyclical/Materials. Mid-cap momentum — high turnover, factor-driven, and historically very volatile (rebalances semi-annually and chases recent winners).

The real issues:

Factor concentration: both are pro-cyclical, growth/momentum-tilted. They tend to move together in risk-on/risk-off regimes despite different cap sizes.
No international, no value, no small-cap broad exposure, no bonds.
XMMO's 0.35% ER is fine but it's a factor bet, not a core holding.

Should you sell everything?

No — and especially not without thinking about it. A few considerations:

It's a Roth IRA, so selling has zero tax cost. That removes the usual friction. You can rebalance freely.
You're 32 with a long horizon → high equity, growth tilt is defensible. The question is whether you want this much concentration in US large growth + mid momentum.
Past 5 years VUG and XMMO have crushed broad indexes. Don't confuse that with them being the right forward bet — both are at the high-beta end of factor space.

A reasonable middle ground

Rather than all-or-nothing, consider something like:

Allocation	Role
50–60% VTI or VOO	Broad US core
10–15% VUG	Keep some growth tilt
5–10% XMMO	Keep momentum sleeve if you believe in it
15–20% VXUS	International diversification (you have none)
5–10% AVUV or VBR	Small-cap value (factor balance vs. growth/momentum)

That keeps your tilts but adds genuine diversification. If you want true simplicity: VT or 80% VTI / 20% VXUS and call it done.

Bottom line

85% in VUG+XMMO isn't catastrophic for a 32-year-old Roth, but it's a concentrated factor bet (growth + momentum) masquerading as diversification because it's "two ETFs." Since it's a Roth, rebalance freely — I'd add broad US, international, and a value/small-cap counterweight rather than nuking the growth tilt entirely.

Want me to model expected return/volatility ranges for your current mix vs. a diversified alternative?

This response may contain financial commentary based on historical data and does not constitute investment advice. Past performance is not indicative of future results. Please consult a qualified financial advisor before making investment decisions.