BlackRock’s iShares tries to appeal to investors who want to diversify beyond the so-called Magnificent Seven.
The company launched the iShares Top 20 US Stocks ETF (TOPT) this month. It not only contains the Magnificent Seven – Apple, Amazon, Meta, Alphabet, Microsoft, Nvidia And Tesla. It consists of the twenty largest American stocks, measured by market capitalization.
“What the iShares build ETFs are designed to do is provide a toolbox of simple solutions that allow investors to capture the growth of some of the largest companies in the US stock market today, but to do so in a broader and more diversified way ,” BlackRock’s Rachel Aguirre told CNBC’s “ETF Edge” on Monday.
Aguirre, head of the company’s U.S. iShares product, noted that the ETF’s mission is to provide an easy and accessible way to leverage megacap innovation – “whether that be in technology heavy sector.” Nasdaq space or, more broadly, within the S&P [500].”
According to Aguirre, the ETF provides an avenue for investors concerned about the concentration of Magnificent Seven stocks in the S&P 500.
On Thursday, the Magnificent Seven as a group fell more than 3.5%, losing about $615 billion in market capitalization. That corresponds to the size of JPMorgan Chase.
However, the Magnificent Seven is still up about 43% year to date, while the S&P500 is up about 20%
“It is important for customers and investors to remember that opinions on this topic are divided. There are many investors who believe that the big will become bigger [and] that the winners will keep winning,” Aguirre said. ‘There is also another side to this argument. There are many investors who believe that it is actually a very worrying time to continue investing in mega-cap companies simply because of their high valuations.”
The iShares Top 20 US Stocks ETF is down 2% since its launch on October 23.