The historic benefits of big technology can affect portfolio makeup, especially if the target is diversifying.
Astoria Portfolio Advisor CEO John Davi supports the so-called seven epic stocks, including Apple, Microsoft, Nvidia, Amazon, Meta Platforms, Alphabet and Tesla, to lean the S&P 500 index. It’s too strong.
“These Mag 7 shares are very expensive right now,” Davi said he told CNBC’s “ETF Edge” this week. “You need to rotate your portfolio and rotate it to something else next to the ‘7’ inventory. ”
Davi believes it has a product that supports long-term investors. His company is behind Astoria US Equity’s Weight Quality Kings ETF (ROE). According to Astoria’s website, it invests in 100 of the highest quality large and intermediate stocks in the US, avoiding “concentration risks associated with market cap weights.”
“The marginal contribution to risk and returns is much higher,” Davi said.
As of January 31st, most of the top 10 S&P 500 stocks are big technology. According to Factset, they make up about 36% of the index.
At Kings ETFs, which have a weight quality equivalent to Astoria US, each inventory is weighted by about 1%, according to Factset. Since the ETF was launched on July 31, 2023, the fund has grown by more than 26%. Meanwhile, the S&P 500 has grown by 32% over the same period.
Vettafi’s Todd Rosenbluth highlighted ETF options beyond Astoria’s ETFs for investors looking to diversify.
“If you want a more quality growth or quality filter with the S&P 500, Invesco has S&P 500 quality ETFs.
