Nov 10, 2026
If you bought a broad index fund so you’d never have to worry about one company’s headlines, recent news is a reminder that you can’t insulate your investment portfolio completely from company failings and CEO missteps.
Nvidia (TSX:NVDA) shares fell more than 6% after the chipmaker’s board opened an independent investigation into CEO Jensen Huang’s relationship with a woman U.S. intelligence agencies reportedly believe is a Chinese spy.
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Many investors aren’t bothered — believing their exchange-traded fund (ETF) purchase shelters their investments from individual company market swings. But if you hold any of the popular broad-based ETFs — such as Vanguard S&P 500 Index ETF (TSX:VFV) or the iShares Core Equity ETF Portfolio (TSX:XEQT) — your holdings will feel the impact of the current Nvidia fallout. That’s because Nvidia isn’t a side bet in these broad-based ETFs; it’s the single largest stock in both funds (and in other sector-specific ETFs).
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That doesn’t mean investors need to panic. But it is a good opportunity to find out how much of your portfolio rides on one company — and, right now, on one CEO.
What is Jensen Huang accused of — and why does it matter?
So what exactly is happening at Nvidia? Huang told staff in an email on Sunday that he had an affair with the woman, according to CNBC. That’s when Nvidia’s board of governors chose to launch an independent investigation into spying allegations. Turns out the woman Huang had an affair with — Alice Huang, who is not related to Jensen Huang, despite the same last name — is an executive at cloud company Megaspeed. While Megaspeed is a Nvidia customer, the company has been accused of helping Chinese firms restricted from obtaining Nvidia artificial intelligence (AI) chips to obtain the tech.
Jensen Huang has not been charged with any crime and, for its part, Nvidia’s board said it has “no reason to believe” national security or company secrets were compromised. A company spokesperson said Huang plans to stay on as CEO. And China’s Foreign Ministry called the spy allegation unsubstantiated.
But investors are also speaking out — by cashing out. Weighing the threat of Nvidia without Jensen Huang, investors are reacting, prompting the stock to drop in value. Dan Ives, a senior managing director at Yorkville Ives, called it a “black eye” for Huang and warned that the chance he could be removed as CEO adds risk to the stock.
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How much Nvidia is in VFV and XEQT?
Investors buy a broad-based ETF, like VFV or XEQT as a hedge against individual company failures, so the real question is how big of a chunk did Nvidia take in each of these ETFs?
As of Aug. 31, 2026, Nvidia made up about 8.07% of VFV — a fund that tracks the S&P 500, which weights companies by market value. Nvidia has a large stake because the biggest firms get the biggest share in this ETF.
XEQT is far broader, holding roughly 8,300 stocks across the U.S., Canada and international markets. Even so, Nvidia was its largest holding at about 3.25% of the fund.
To illustrate how Nvidia impacts investor’s holdings, let’s assume $10,000 was invested into VFV — resulting in roughly $807 of that investment going towards Nvidia. When Nvidia stock dropped 6%, that translates into a portfolio loss of approximately $48 from that initial investment, or about 0.5% of your VFV balance (assuming no other stocks held inside this fund moved).
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If that same $10,000 were invested in XEQT, the investor would’ve held approximately $325 in Nvidia prior to the 6% stock slide. After the dip, that same investor would’ve noticed a $20 drop in their investment (again, assuming no other stocks held inside the fund moved).
Where does overlap turn a small risk into a bigger one?
The biggest risk for ETF investors is in the overlap. Analysis by Motley Fool Canada found that a portfolio split of 70% XEQT and 30% VFV would lift the investor’s exposure to Nvidia to about 4.7% of the total investment. Nvidia, Apple and Microsoft combined would top 12%, and U.S. stocks would jump from about 45% to roughly 62%.
That level of exposure is perfectly acceptable if it’s intentional and known. The danger comes with an investor opts to chase market returns, adding Nvidia shares to ETF purchases without realizing how each move stacks on the last and increases the portfolio’s exposure to the success or failure of just one firm.
Should you sell your index ETF over CEO risk?
Is one company’s scandal a reason to dump a diversified fund? Even if it’s a juicy one, like an affair with a spy? For most long-term investors, even this scandal isn’t a reason to exit Nvidia holdings — and this is particularly true if your holdings are due to the purchase of ETF shares.
Remember, index funds hold companies in proportion to their size, so if Nvidia’s actual value falls, its weight in the fund shrinks and other holdings take up more space — helping your portfolio to rebalance due to market changes.
Plus, selling comes with its own costs. In a non-registered account, it can trigger capital gains tax. And if you withdraw from a TFSA to reshuffle, that contribution room only returns in the next calendar year. Rebalancing by switching funds inside the account avoids both problems.
What to do now
Before you do anything, get a clear picture of what you own:
- Check the top holdings for each ETF on the Vanguard and BlackRock websites
- Add up your Nvidia exposure across all accounts, including TFSA, RRSP, First Home Savings Account (FHSA) and non-registered
- Include any individual Nvidia shares or tech-focused ETFs
- Decide on a personal cap for any single company and rebalance on a set schedule
- Note that Nvidia reports fiscal third-quarter 2027 results on Nov. 17, with a conference call at 5 pm ET, which could bring more volatility
If your overlap is intentional and your time horizon is long, a single-company scandal is the kind of risk an index fund is built to absorb. If you are unsure how much Nvidia you own, that’s the number to find first.
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Leslie Kennedy served as an editor at Thomson Reuters and for Star Media Group, followed by a number of years as a writer and editor and content manager in marketing communications, before returning to her editorial roots. She is a graduate of Humber College’s post-graduate journalism program and has been a professional writer and editor ever since.
