Latest news with #megacap
Yahoo
13-07-2025
- Business
- Yahoo
BlackRock Is Tweaking the S&P 500 Formula With Its New ETFs. Should You Be a Buyer?
ETFs that have tracked the S&P 500 have always been popular. However, with the index getting top-heavy, BlackRock introduced two ETFs to help investors remain invested in the S&P 500 with less megacap exposure. After a closer look, it may be best to stick to the original. These 10 stocks could mint the next wave of millionaires › The largest and most popular exchange-traded funds (ETFs) are those that track the performance of the S&P 500. In fact, the three largest ETFs as measured by assets under management are all ones that mimic the performance of this benchmark index. These funds include the Vanguard S&P 500 ETF (NYSEMKT: VOO), the SPDR S&P 500 ETF Trust (NYSEMKT: SPY), and the iShares Core S&P 500 ETF (NYSEMKT: IVV). However, some investors have raised concerns about the current heavy concentration of megacap stocks that now dominate the S&P 500. As of July 9, the S&P 500's top three holdings of Nvidia, Microsoft, and Apple made up over 20% of its holdings, while its top 10 holdings represented 38% of the index. With megacap stocks dominating the S&P 500, BlackRock (NYSE: BLK) introduced a couple of new ETFs to let investors invest in the index without the megacap exposure. In April, the company launched the iShares S&P 500 3% Capped ETF (NYSEMKT: TOPC), while earlier this month it introduced the iShares S&P 500 ex Top 100 ETF (NYSEMKT: XOEF). The former ETF tracks the performance of the S&P 500 index, but caps each holding's weighting at a maximum of 3%. For stocks that have a weighting above 3% in the S&P 500, the excess weight is redistributed to companies that have not yet reached the 3% cap. Currently, only its top five holdings have a weighting of 3% or slightly above. The iShares S&P 500 ex Top 100 ETF, meanwhile, tracks the S&P 500 performance excluding the 100 largest stocks, better known as the S&P 100. BlackRock promotes using the ETF in conjunction with the iShares S&P 100 ETF (NYSEMKT: OEF), so that investors can balance their megacap exposure as they want. The recent top heaviness of the S&P 500, especially among megacap technology names, has drawn a lot of attention. As such, it's not surprising that a firm like BlackRock is looking to give investors some alternatives to keep them invested in the index, but with a little less exposure to these megacap tech stocks. However, these funds don't have much of a track record and come with higher expense ratios. The iShares S&P 500 ex S&P 100 ETF has an expense ratio of 0.2%, while the iShares S&P 500 3% Capped ETF is at 0.15%, although a fee waiver will bring it down to 0.09% until April 3, 2026. That compares to only 0.03% for the Vanguard 500 S&P ETF, which is the most widely held ETF. The Vanguard 500 S&P ETF, meanwhile, also has a strong, long-term track record. The ETF has generated an average annualized return of 16.6% over the past five years and 13.6% over the past 10 years, as of the end of June. Arguably, the S&P 500's strong performance over the years stems directly from the index not capping the weighting of its holdings. As a market-cap-weighted index, it lets the best and strongest companies grow to become an ever-increasing percentage of the index. Ultimately, it is these mega-winners that power the market. A J.P. Morgan study looking at stocks in the Russell 3000, which is comprised of the 3,000 largest U.S. stocks, between 1980 to 2020, found that most stocks underperformed the index, and that it was these mega-winning stocks that were responsible for most of the market's gains. In fact, it found that two-thirds of stocks underperformed the index during this period, while 40% of stocks had negative returns. As such, while it may sound tempting to reduce megacap exposure, I think the way the S&P has been set up is why it performs so well in the first place. A coach isn't going to want to limit their starters' minutes in an important game or sit them on the bench if they don't have to, and neither should investors look to do this when it comes to investing. As such, I'd stick to an S&P 500 ETF like the Vanguard 500 S&P ETF, and just use a consistent dollar-cost averaging strategy. Ever feel like you missed the boat in buying the most successful stocks? Then you'll want to hear this. On rare occasions, our expert team of analysts issues a 'Double Down' stock recommendation for companies that they think are about to pop. If you're worried you've already missed your chance to invest, now is the best time to buy before it's too late. And the numbers speak for themselves: Nvidia: if you invested $1,000 when we doubled down in 2009, you'd have $427,709!* Apple: if you invested $1,000 when we doubled down in 2008, you'd have $40,087!* Netflix: if you invested $1,000 when we doubled down in 2004, you'd have $671,477!* Right now, we're issuing 'Double Down' alerts for three incredible companies, available when you join , and there may not be another chance like this anytime soon.*Stock Advisor returns as of July 7, 2025 JPMorgan Chase is an advertising partner of Motley Fool Money. Geoffrey Seiler has positions in Vanguard S&P 500 ETF. The Motley Fool has positions in and recommends Apple, JPMorgan Chase, Microsoft, Nvidia, and Vanguard S&P 500 ETF. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy. BlackRock Is Tweaking the S&P 500 Formula With Its New ETFs. Should You Be a Buyer? was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
13-07-2025
- Business
- Yahoo
Cathie Wood buys $18.7 million of troubled megacap tech stock
Cathie Wood buys $18.7 million of troubled megacap tech stock originally appeared on TheStreet. Cathie Wood doesn't easily walk away from the companies she believes in. The Ark Invest founder has a habit of sticking with tech stocks she sees as shaping the future. Even when these names face controversy, Wood often leans in rather than pulling back. This is what she just did, adding to a high-profile tech stock that's been under pressure, caught in headlines and market swings. Wood's funds have experienced a volatile ride this year, swinging from sharp losses to strong gains. 💰💸 💰💸 In January and February, the Ark funds rallied as investors bet on the Trump administration's potential deregulation that could benefit Wood's tech bets. But the momentum hit a wall in March and April, with the funds trailing the market as top holdings slid amid growing concerns over the macroeconomy and trade policies. Now, the fund is regaining momentum. As of July 11, the flagship Ark Innovation ETF () is up 25.5% year-to-date, far outpacing the S&P 500's 6.4% gain. Wood's remarkable return of 153% in 2020 helped build her reputation and attract loyal investors. Her strategy can lead to sharp gains during bull markets but also painful losses, like in 2022, when ARKK dropped more than 60%. As of July 11, Ark Innovation ETF, with $6.8 billion under management, has delivered a five-year annualized return of negative 1.7%. The S&P 500 has an annualized return of 16.2% over the same period. Wood's investment strategy is straightforward: Her Ark ETFs typically buy shares in emerging high-tech companies in fields such as artificial intelligence, blockchain, biomedical technology, and robotics. According to Wood, these companies have the potential to reshape industries, but their volatility leads to major fluctuations in Ark funds' Ark Innovation ETF wiped out $7 billion in investor wealth over the 10 years ending in 2024, according to an analysis by Morningstar's analyst Amy Arnott. That made it the third-biggest wealth destroyer among mutual funds and ETFs in Arnott's ranking. Wood recently said the U.S. is coming out of a three-year 'rolling recession' and heading into a productivity-led recovery that could trigger a broader bull market. In a letter to investors published in late April, she dismissed predictions of a recession dragging into 2026 and struck an optimistic tone for tech stocks. "During the current turbulent transition in the U.S., we think consumers and businesses are likely to accelerate the shift to technologically enabled innovation platforms including artificial intelligence, robotics, energy storage, blockchain technology, and multiomics sequencing," she said. But not all investors share this optimism. Over the past 12 months through July 10, the Ark Innovation ETF saw nearly $2 billion in net outflows, according to ETF research firm VettaFi. On July 11, Wood's Ark funds bought 59,705 shares of Tesla Inc. () . That chunk of stocks is worth roughly $18.7 million. Wood has been a longtime supporter of Tesla and still believes in the stock, even after a sharp drop following CEO Elon Musk's recent announcement about launching a new political sales have dropped in key markets like Europe and China, as Musk faced political pushback and alienated some car buyers in key markets. 'We've been dealing with controversy around Elon Musk in one form or another since we first bought the stock,' Wood said in a recent interview with Bloomberg. 'We do trust the board and the board's instincts here and we stay out of politics.' She also noted that Musk seems more focused on the business again, especially after he decided to take charge of sales in the U.S. and Europe. 'One of the announcements Elon made recently is that he is going to oversee sales in the U.S. and in Europe,' Wood said. 'When he puts his mind on something, he usually gets the job done. So I think he's much less distracted now than he was, let's say, in the White House 24/7.' Meanwhile, Tesla is entering the India market, with its first showroom in Mumbai next week. Tesla will need to pay about 70% import duty fees, as it does not want to produce cars in India, according to Reuters. More Tesla: Tesla robotaxi launch hits major speed bump Tesla claims rival startup is built on stolen trade secrets 10,000 people join Tesla class action lawsuit over key issue Back in March, Wood predicted Tesla's stock would reach $2,600 in five years, which is nearly nine times higher than where it trades now. Much of the optimism is driven by the company's highly anticipated Robotaxi, which Wood believes will account for 90% of the company's value over time. Tesla has long been Wood's top holding, accounting for 9.26% of the Ark Innovation ETF. The stock is down more than 22% year-to-date, the worst among the Magnificent 7 Wood buys $18.7 million of troubled megacap tech stock first appeared on TheStreet on Jul 12, 2025 This story was originally reported by TheStreet on Jul 12, 2025, where it first appeared.
Bloomberg
20-05-2025
- Business
- Bloomberg
Big Tech Quandary Leaves Equity-Options Pros Divided on Outlook
Dip-buying in US stocks was a key theme Monday, but the options market is signaling that there's one crucial area where traders remain far from convinced about the outlook for the next few months: Big Tech. When it comes to the megacap tech stocks that fueled much of the advance in US equities the past couple years, the narrative is as polarized as it's been in weeks, with options bets on gains almost as pronounced as wagers on losses. It's also a departure from options professionals' stance toward the broad market, where they've taken on a solidly bullish slant as tariff tension has eased.
