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Should iShares Top 20 U.S. Stocks ETF (TOPT) Be on Your Investing Radar?
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If you're interested in broad exposure to the Large Cap Growth segment of the US equity market, look no further than the iShares Top 20 U.S. Stocks ETF (TOPT - Free Report) , a passively managed exchange traded fund launched on 10/23/2024.
The fund is sponsored by Blackrock. It has amassed assets over $242.27 million, making it one of the average sized ETFs attempting to match the Large Cap Growth segment of the US equity market.
Why Large Cap Growth
Large cap companies typically have a market capitalization above $10 billion. Considered a more stable option, large cap companies boast more predictable cash flows and are less volatile than their mid and small cap counterparts.
While growth stocks do boast higher than average sales and earnings growth rates, and they are expected to grow faster than the wider market, investors should note these kinds of stocks have higher valuations. Additionally, growth stocks have a greater level of risk associated with them. Even though growth stocks are more likely to outperform their value counterparts in strong bull markets, value stocks have a record of delivering better returns in almost all markets than growth stocks.
Costs
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.20%, making it one of the cheaper products in the space.
It has a 12-month trailing dividend yield of 0.27%.
Sector Exposure and Top Holdings
ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Information Technology sector--about 49.30% of the portfolio. Financials and Telecom round out the top three.
Looking at individual holdings, Microsoft Corp (MSFT - Free Report) accounts for about 14.72% of total assets, followed by Nvidia Corp (NVDA - Free Report) and Apple Inc (AAPL - Free Report) .
The top 10 holdings account for about 74.37% of total assets under management.
Performance and Risk
TOPT seeks to match the performance of the S&P 500 TOP 20 SELECT INDEX before fees and expenses. The S&P 500 Top 20 Select Index composes of the 20 largest U.S. companies by market capitalization within the S&P 500 Index.
The ETF has added roughly 6.39% so far. In the past 52-week period, it has traded between $21.25 and $27.67.
With about 25 holdings, it has more concentrated exposure than peers.
Alternatives
IShares Top 20 U.S. Stocks ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, TOPT is a great option for investors seeking exposure to the Style Box - Large Cap Growth segment of the market. There are other additional ETFs in the space that investors could consider as well.
The Vanguard Growth ETF (VUG - Free Report) and the Invesco QQQ (QQQ - Free Report) track a similar index. While Vanguard Growth ETF has $178.19 billion in assets, Invesco QQQ has $355.77 billion. VUG has an expense ratio of 0.04% and QQQ charges 0.20%.
Bottom-Line
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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Should iShares Top 20 U.S. Stocks ETF (TOPT) Be on Your Investing Radar?
If you're interested in broad exposure to the Large Cap Growth segment of the US equity market, look no further than the iShares Top 20 U.S. Stocks ETF (TOPT - Free Report) , a passively managed exchange traded fund launched on 10/23/2024.
The fund is sponsored by Blackrock. It has amassed assets over $242.27 million, making it one of the average sized ETFs attempting to match the Large Cap Growth segment of the US equity market.
Why Large Cap Growth
Large cap companies typically have a market capitalization above $10 billion. Considered a more stable option, large cap companies boast more predictable cash flows and are less volatile than their mid and small cap counterparts.
While growth stocks do boast higher than average sales and earnings growth rates, and they are expected to grow faster than the wider market, investors should note these kinds of stocks have higher valuations. Additionally, growth stocks have a greater level of risk associated with them. Even though growth stocks are more likely to outperform their value counterparts in strong bull markets, value stocks have a record of delivering better returns in almost all markets than growth stocks.
Costs
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.20%, making it one of the cheaper products in the space.
It has a 12-month trailing dividend yield of 0.27%.
Sector Exposure and Top Holdings
ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Information Technology sector--about 49.30% of the portfolio. Financials and Telecom round out the top three.
Looking at individual holdings, Microsoft Corp (MSFT - Free Report) accounts for about 14.72% of total assets, followed by Nvidia Corp (NVDA - Free Report) and Apple Inc (AAPL - Free Report) .
The top 10 holdings account for about 74.37% of total assets under management.
Performance and Risk
TOPT seeks to match the performance of the S&P 500 TOP 20 SELECT INDEX before fees and expenses. The S&P 500 Top 20 Select Index composes of the 20 largest U.S. companies by market capitalization within the S&P 500 Index.
The ETF has added roughly 6.39% so far. In the past 52-week period, it has traded between $21.25 and $27.67.
With about 25 holdings, it has more concentrated exposure than peers.
Alternatives
IShares Top 20 U.S. Stocks ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, TOPT is a great option for investors seeking exposure to the Style Box - Large Cap Growth segment of the market. There are other additional ETFs in the space that investors could consider as well.
The Vanguard Growth ETF (VUG - Free Report) and the Invesco QQQ (QQQ - Free Report) track a similar index. While Vanguard Growth ETF has $178.19 billion in assets, Invesco QQQ has $355.77 billion. VUG has an expense ratio of 0.04% and QQQ charges 0.20%.
Bottom-Line
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.