Investors are adding to their mega-cap exposures following strong first quarter earnings reports and a rosier economic outlook.
(AAPL) was the latest big tech company to report earnings that beat Wall Street’s estimates, reporting an all-time record in services and a March-quarter record for the iPhone, sending shares of the company higher on Friday.
“The U.S. stock market has been led recently by mega-cap companies that are benefitting from their scale and ability to grow fast,” Todd Rosenbluth, head of research at VettaFi, said. “Apple was just the latest company to report stronger than expected earnings this week.”
Apple is the top holding in the (XLG ), which offers exposure to the 50 largest securities by market capitalization in the Russell 3000 universe. XLG effectively delivers concentrated exposure to U.S. mega-cap stocks, something investors have been increasingly looking for as mega-caps have posted impressive recovery rallies this year.
XLG took in $276 million in net flows in April, a sharp pivot from the outflows observed during the first quarter. Between January 1 and March 31, XLG saw $171 million in net outflows, and in 2022, the fund saw $43 million in net outflows, according to ETF Database.
Over 51% of XLG by weight is in the top 10 securities, whereas the top 10 securities in the S&P 500 comprise approximately 27% of the index by weight. Approximately 62% of XLG by weight is in the top 15 securities.
XLG has $2.2 billion in assets under management and charges 20 basis points.
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