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Mega-Cap ETF (XLG) Hits New 52-Week High

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For investors seeking momentum, Invesco S&P 500 Top 50 ETF (XLG - Free Report) is probably on the radar. The fund just hit a 52-week high, and is up roughly 76% from its 52-week low price of $168.40/share.

But are more gains in store for this ETF? Let’s take a quick look at the fund and the near-term outlook on it to get a better idea on where it might be headed:

XLG in Focus

This fund offers exposure to mega-cap securities with key holdings in information technology, communication services, healthcare and consumer discretionary. However, it is concentrated on the top two firms — Apple (AAPL - Free Report) and Microsoft (MSFT - Free Report) — with double-digit allocation each while other firms hold less than 8.21% of assets. The product charges investors 20 basis points in fees (see: all the Large Cap Blend ETFs here).

Why the Move?

The mega-cap space of the broad U.S. stock market has been an area to watch lately given the regained momentum after the retail trading frenzy cools down. Improving corporate earnings and widened reach of COVID-19 vaccines has rekindled investors’ interest in riskier assets.  Additionally, optimism over a fresh coronavirus-relief spending package is expected to bolster economic growth, thereby driving the stocks higher.

More Gains Ahead?

Currently, XLG has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook. Therefore, it is hard to get a handle on its future returns one way or the other. However, many of the segments that make up this ETF have a strong Zacks Industry Rank. So, there is definitely some promise for those who want to ride this surging ETF a little further.

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