Summarize this content to 2000 words in 6 paragraphs in Arabic Stay informed with free updatesSimply sign up to the US equities myFT Digest — delivered directly to your inbox.Investors have poured record amounts of money into a fund that spreads its assets equally across the S&P 500, as concerns mount that Wall Street\u2019s returns have become overly reliant on a handful of technology titans.The Invesco S&P 500 Equal Weight exchange traded fund took in about $14.4bn in the second half of 2024, according to data from Morningstar, as investors hedged themselves against the dominance of big technology stocks. The surge took total inflows for the fund to $17bn for the year and comes after consecutive years of the fund underperforming the S&P. Analysts said it underscores how investors are becoming concerned by the shadow cast by Magnificent Seven tech stocks \u2014 Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla.Last year the S&P rose 24 per cent, with the seven responsible for about half of the index\u2019s gains, according to S&P Dow Jones Indices. The equal weight index rose just 11 per cent as its quarterly rebalance favoured lower growth stocks.\u201cInvestors\u2019 biggest focus recently has been concentration risk, worries that the market is too top-heavy,\u201d said Manish Kabra, head of US equity strategy at Soci\u00e9t\u00e9 G\u00e9n\u00e9rale. He expects to see double-digit earnings growth beyond the biggest tech companies this year.\u00a0\u201cIf that happens, you don\u2019t need to be so defensively positioned,\u201d he said, adding that \u201cso many people I meet point to the equal-weighted index gaining 11 per cent last year and say it makes more sense to invest there than to expect 20-plus returns [from the market-cap weighted S&P 500] every year.\u201dThe Invesco fund sells the S&P\u2019s leaders and buys its laggards every quarter when it rebalances, to give each of its holdings an equal share of fund assets. That approach was beneficial in 2022, as the index\u2019s largest stocks bore the brunt of the sell-off that year.In spite of its underperformance, the fund has amassed more than $72bn and made it one of the 25 largest US ETFs by total assets, according to Morningstar. That showing topped the ETF\u2019s previous best for flows of about $12.8bn in 2023, according to Morningstar.Investors are also turning to derivatives, such as CME Group\u2019s S&P 500-equal weight futures, to bet on the S&P while hedging against a sharp drop in tech stocks. The contract, which launched in February, has averaged open interest of 16,500 contracts this month, worth about $2.4bn.A sharp drop in the shares of the Magnificent Seven in July and August led to a jump in interest in the contract, said CME global head of equity products Paul Woolman. \u201cI think that woke some more clients up in terms of how to manage that risk and what kind of strategies they should put in place.\u201d\u201cIt is a reflection of market participants wanting to diversify into cheaper assets and not just chasing performance,\u201d said Alessio de Longis, head of investments with Invesco Solutions, a multi-asset arm of the $1.8tn fund manager, of the overall trend towards interest in equal-weighting.However Bryan Armour, director of passive strategies research at Morningstar, said that using a fund that adjusted to give each company an equal weighting was unlikely to be the past way to sidestep fears of market concentration.\u201cIncorporating fundamentals in the assessment of each company would better serve investors than arbitrarily making them all equal weights,\u201d Armour said. \u201cAt least, that would better reflect the market\u2019s identity.\u201dT Rowe Price portfolio manager Rick de los Reyes said the shift in sentiment could help sectors like energy, metals, mining and other industrial stocks. \u201cThere\u2019s some excitement around the parts of the market that have been left behind, and the view that you could finally start to see some strength,\u201d he said.<\/p>\n","protected":false},"excerpt":{"rendered":"
Summarize this content to 2000 words in 6 paragraphs in Arabic Stay informed with free updatesSimply sign up to the US equities myFT Digest — delivered directly to your inbox.Investors have poured record amounts of money into a fund that spreads its assets equally across the S&P 500, as concerns mount that Wall Street\u2019s returns<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[63],"tags":[],"class_list":{"0":"post-166224","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-tech"},"_links":{"self":[{"href":"https:\/\/globetimeline.com\/ar\/wp-json\/wp\/v2\/posts\/166224","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/globetimeline.com\/ar\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/globetimeline.com\/ar\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/globetimeline.com\/ar\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/globetimeline.com\/ar\/wp-json\/wp\/v2\/comments?post=166224"}],"version-history":[{"count":0,"href":"https:\/\/globetimeline.com\/ar\/wp-json\/wp\/v2\/posts\/166224\/revisions"}],"wp:attachment":[{"href":"https:\/\/globetimeline.com\/ar\/wp-json\/wp\/v2\/media?parent=166224"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/globetimeline.com\/ar\/wp-json\/wp\/v2\/categories?post=166224"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/globetimeline.com\/ar\/wp-json\/wp\/v2\/tags?post=166224"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}