To reduce your risk, it’s important to diversify your portfolio. SPY creates this diversity within a fund, while Frec’s D.I. creates diversity by investing in the underlying stock individually. Both have similar risks and lower your risk by diversifying. However, all investing has some risk. One increase in investment risk is if you’re heavily invested in one stock. So, if you have a lot of stock that’s already part of the S&P 500, Frec allows you to reduce it by removing that stock from the index or moving the stock you already own into it. However, if you invest in SPY, you’re not able to remove that stock and you could be even more invested in a single stock and not have as much diversification benefit.