ETFs
5 Large-Cap ETFs Leading This Year’s Market Rally
Wall Street has seen a remarkable recovery this year, with the S&P 500 and Nasdaq Composite Index hitting a series of record highs thanks to strong profit growth and the hype around artificial intelligence (AI). This shows that large-cap stocks have been the clear leaders.
We’ve highlighted five large-cap sector ETFs that are at the forefront of the market’s rally so far this year. These are VanEck Vectors Semiconductor ETF SMH, Invesco S&P 500 Momentum ETF SPMO, Gabelli Growth Innovators ETF GGRW, Fidelity Blue Chip Growth ETF GFCG and MicroSectors FANG+ ETN FNG.
Here, we have highlighted some solid reasons why the large-cap sector is outperforming.
Strong Earnings Reports: Many large-cap companies reported better-than-expected earnings, thanks to strong consumer demand and effective cost management. A Deutsche Bank research report showed that earnings for a basket of stocks titled “Mega-Cap Growth and Tech” rose 39% year-on-year in the first quarter, compared with 5.9% growth for the S&P 500.
The Magnificent Seven: The Magnificent Seven are the biggest growth engine in the technology sector and the S&P 500 as a whole. It now represents 31% of the weight of the S&P 500.
AI boom: Large-cap stocks have been the biggest beneficiaries of the AI boom. Notably, NVIDIA (NVDA), Apple (AAPL), Alphabet (GOOGL, GOOG), Microsoft (MSFT), Amazon (AMZN), and Meta (META), all with market caps above $1 trillion, are the most big winners (read: NVIDIA overtakes Apple: ETFs will exploit the incredible growth story).
Resilience at higher rates for a longer period: Large-cap stocks have shown strong resilience in the face of periods of higher-than-expected interest rates. This is because these stocks are less volatile, generate a constant dividend stream and offer stability.
Less risky bet: Large-cap stocks are generally less risky because these companies are more established and offer a wider range of products or services. These provide some security in the event of an economic downturn or political problems.
Hedge against inflation: Large-cap companies, especially those with pricing power, can better cope with inflationary pressures by passing costs on to consumers. This makes them attractive to investors looking for protection against inflation, given the persistence of inflation.
Below we have presented the profile of the ETFs mentioned above:
Focus on ETFs
VanEck Vectors Semiconductor ETF (SMH) – Up 46.1%
The VanEck Vectors Semiconductor ETF provides exposure to companies involved in semiconductor production and equipment. It tracks the MVIS US Listed Semiconductor 25 Index and holds 26 stocks in its basket. VanEck Vectors Semiconductor ETF has managed assets worth $22 billion and charges 35 basis points in annual fees and expenses. SMH trades an average daily volume of 7.2 million shares and has a Zacks ETF Rank #1 (Strong Buy) with a High Risk Outlook (Read: Consumer Optimism at 3-Year High: 5 Picks of ETF).
Invesco S&P 500 Momentum ETF (SPMO) – Up 30.1%
The Invesco S&P 500 Momentum ETF tracks the S&P 500 Momentum Index, which measures the performance of stocks in the S&P 500 Index that have a high “momentum score.” It holds 101 stocks in its basket and charges 13 basis points in fees per year. Information technology is the leading sector with a 49.2% share, while consumer discretionary, communication services and healthcare round out the next three spots. of $1.6 billion and trades with an average daily volume of 297,000 shares.
Gabelli Growth Innovators ETF (GGRW) – Up 29.7%
Gabelli Growth Innovators ETF is an actively managed fund that seeks to invest in companies in secular growth industries whose competitive moats will enable outsized market share gains and whose future cash flows are undervalued at current market prices, according to the portfolio manager. The Gabelli Growth Innovators ETF has amassed $4.9 million in its asset base and trades an average daily volume of 2,000 shares. The product has an expense ratio of 0.90%.
Fidelity Blue Chip Growth ETF (FBCG) – Up 25.3%
The Fidelity Blue Chip Growth ETF invests in blue-chip companies (well-known, well-established and well-capitalized), which generally have large or mid-sized market capitalizations. These companies have above-average growth potential (stocks of these companies are often called “growth” stocks). The Fidelity Blue Chip Growth ETF holds 206 stocks in its basket with $1.8 billion in assets under management. It charges 59 basis points in annual fees and trades an average daily volume of 445,000 shares.
Microsectors FANG+ ETN (FNGS) – Up 23.4%
MicroSectors FANG+ ETN is linked to the performance of the NYSE FANG+ Index, which is equal dollar weighted and designed to provide exposure to a group of highly traded growth stocks of technology and next-generation technology companies. The note represents a 10% share in each of the shares. MicroSectors FANG+ ETN has accumulated $275.9 million in its asset base and charges 58 basis points in annual fees. It trades an average daily volume of 139,000 shares and has a Zacks ETF Rank #3 (Hold) (Read: Hedge Fund’s ‘Mag 7’ Exposure Hits Record High: ETFs to Exploit).
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VanEck Semiconductor ETF (SMH): ETF Research Reports
Invesco S&P 500 Momentum ETF (SPMO): ETF Research Reports
MicroSectors FANG+ ETN (FNGS): ETF Research Reports
Fidelity Blue Chip Growth ETF (FBCG): ETF Research Reports
Gabelli Growth Innovators ETF (GGRW): ETF Research Reports