In this article, Big Tech’s historic gains may be impacting the composition of your portfolio, particularly if diversification is your objective. Astoria Portfolio Advisors CEO John Davi cautions that the S&P 500 index is heavily skewed towards the so-called Magnificent Seven stocks: Apple, Microsoft, Nvidia, Amazon, Meta Platforms, Alphabet, and Tesla.
Davi expressed his concerns on CNBC’s “ETF Edge,” stating that these Mag Seven stocks are currently highly priced. He recommended investors to diversify their portfolios by exploring options beyond these popular stocks. Davi introduced a product aimed at long-term investors, the Astoria US Equity Weight Quality Kings ETF (ROE), which focuses on investing in 100 top-quality U.S. large and mid-cap stocks to mitigate concentration risks associated with market-cap weighting.
According to Davi, the Astoria US Equal Weight Quality Kings ETF assigns each stock a weight of around 1%, offering a different approach compared to the S&P 500, where big tech stocks dominate, accounting for approximately 36% of the index as of Jan. 31, as reported by FactSet. Since its launch on July 31, 2023, the Astoria ETF has seen a growth of over 26%, while the S&P 500 has grown by 32% during the same period.
Todd Rosenbluth from VettaFi suggested alternative ETF options for investors seeking diversification beyond Astoria’s ETF. He mentioned Invesco’s S&P 500 quality ETF, SPHQ, for those interested in quality growth filtering on the S&P 500. Additionally, he highlighted American Century’s QGRO ETF, which applies quality and growth filters along with other criteria to provide investors with a diversified investment option.
