XLG: A Concentrated Bet On The Magnificent Seven
Summary
- The "Magnificent Seven" tech mega-caps (Alphabet, Apple, Amazon, Meta Platforms, Microsoft, Nvidia, and Tesla) have outperformed in 2023.
- Valuations for these stocks are at all-time highs, with a P/E ratio of 29x compared to 19x for the S&P 500.
- The Invesco S&P 500 Top 50 ETF is a fund that aims to replicate the S&P 500 Top 50 Index, representing the largest 50 stocks in the S&P 500.
- The index's market capitalization build results in the ETF containing over 50% of its collateral in the 'Magnificent Seven' stocks, representing a concentrated bet on these names.
Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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