Title: Navigating Big Tech’s Impact on Your Investment Portfolio
With the remarkable growth of big tech companies, many investors may find their portfolio’s composition influenced, particularly if they’re aiming for diversification. John Davi, CEO of Astoria Portfolio Advisors, cautions that the S&P 500 index leans heavily towards the “Magnificent Seven” stocks. These include renowned tech giants such as Apple, Microsoft, Nvidia, Amazon, Meta Platforms, Alphabet, and Tesla.
Davi expressed concerns over the market costs of these seven prominent stocks in a recent discussion on CNBC’s “ETF Edge”. He advised investors to consider rebalancing their portfolios and exploring investment opportunities beyond these tech titans.
To assist long-term investors, Astoria Portfolio Advisors has introduced a product – the Astoria US Equity Weight Quality Kings ETF (ROE). According to the company’s website, this ETF invests in the top 100 high-quality US large and mid-cap stocks. The aim is to mitigate the “concentration risks” often associated with market-cap weighting.
Davi asserted that this strategy contributed significantly to risk and return. As per FactSet, as of January 31, the top 10 stocks in the S&P 500, primarily big tech, constituted approximately 36% of the index.
The Astoria US Equal Weight Quality Kings ETF equally weights each stock around 1%, as per FactSet. Since its inception on July 31, 2023, the fund has seen a growth of over 26%. In contrast, the S&P 500 has increased by 32% in the same period.
For investors seeking diversification, Todd Rosenbluth of VettaFi emphasized other ETF options beyond Astoria’s offering. As per Rosenbluth, Invesco’s S&P 500 quality ETF, SPHQ, offers a quality growth filter on the S&P 500. For additional quality and growth filters, American Century’s ETF with the ticker QGRO, may be a suitable choice. This ETF filters based on quality, growth characteristics, and other factors.
In conclusion, while big tech’s growth can impact portfolio make-up, there are strategies and options available for investors looking to diversify and mitigate concentration risks.
