Umair
Big Tech’s historic gains could be affecting your portfolio’s makeup — especially if your goal is diversification.
Astoria Portfolio Advisors CEO John Davi warns the S&P 500 index tilts too far in favor of the so-called Magnificent Seven stocks: Apple, Microsoft, Nvidia, Amazon, Meta Platforms, Alphabet and Tesla.
“Those Mag Seven stocks are very expensive right now,” Davi said told CNBC’s “ETF Edge” this week. “You should rotate your portfolio, and rotate into other things beside ‘Mag Seven’ stocks.”
Davi thinks he has a product to help long-term investors. His firm is behind the Astoria US Equity Weight Quality Kings ETF (ROE). According to the Astoria website, it invests in 100 of the highest quality U.S. large and mid-cap stocks and avoids “concentration risks associated with market-cap weighting.”
“Our marginal contribution to risk and return is a lot higher,” said Davi.
As of Jan. 31, the top 10 stocks in the S&P 500 are mostly big tech. They accounted for about 36% of the index, according to FactSet.
In the Astoria US Equal Weight Quality Kings ETF, each stock is weighted around 1%, according to FactSet. Since the ETF’s launch on July 31, 2023, the fund is up more than 26%. Meanwhile, the S&P 500 is up 32% in the same period.
VettaFi’s Todd Rosenbluth highlighted ETF options beyond Astoria’s ETF for investors looking to diversify.
“If you wanted a more quality growth or quality filter on the S&P 500, Invesco has an S&P 500 quality ETF, SPHQ. If you wanted something that was more quality and growth and additional filters, American Century has an ETF. The ticker is QGRO. This is an ETF that’s going to filter based on quality and growth characteristics and a few other ones,” the firm’s head of research said.
