New York, NY – Big Tech’s dominant position in the market has raised concerns among investors, pushing them towards considering equal-weight exchange-traded funds, says Todd Rosenbluth of VettaFi.
Rosenbluth, the head of research at VettaFi, explained that investors are becoming increasingly worried about the heavy concentration of money in a few select stocks within the broader ETFs tied to the S&P 500 or the Nasdaq 100.
He suggested that investors start looking at options like the Invesco S&P 500 Equal Weight ETF and the Invesco S&P 500 Equal Weight Technology ETF as a way to reduce exposure to the “Magnificent Seven,” a group composed of Apple, Alphabet, Meta, Microsoft, Amazon, Nvidia, and Tesla.
Amidst the upcoming earnings reports from these tech giants, Ben Slavin of BNY Mellon noted that there has been sluggish investment flow into this group earlier this year. Instead, he found that “less-loved” market sectors like financials and real estate are attracting more interest from investors.
Rosenbluth emphasized the importance of spreading out the risk from being dominated by a few tech giants like Apple, Microsoft, and Nvidia to other companies within the same sectors. He also pointed out that the CNBC’s Magnificent 7 Index, consisting of the aforementioned tech giants, had soared almost 6% on Friday and is up 68% over the past 52 weeks.
As Big Tech continues to command a significant portion of the market, investors are increasingly seeking alternative options to diversify their portfolios and mitigate risk. This shift towards equal-weight ETFs reflects growing concerns about the potential vulnerabilities associated with having too much money concentrated in a handful of tech stocks.