Last week gave investors a stark reminder that narrowly focused exchange-traded funds can go down like potent margaritas: Great fun initially, with a high likelihood of some hurt to come.

At issue are heavy concentrations of single stocks that can creep into niche ETFs and diminish the advantages of the diversification found in conventional index investing. Many narrowly focused ETFs are too top-heavy to be useful-in some instances, owning a handful of single stocks might be preferable. And investors might be surprised by heavy single-stock concentrations in some international ETFs.