Investors pile into these ETFs for ‘catch-up’ trade, it’s paying off
Investors are beginning to shift away from the big tech names that have been driving the market and towards broader exposure. The iShares Russell 2000 ETF (IWM) and Invesco S&P 500 Equal Weight ETF (RSP) have seen over $4 billion and about $1.8 billion in inflows respectively this month alone, according to FactSet. The funds offer a way for investors to diversify their portfolios, reducing the impact of individual stocks like Nvidia and Alphabet.
“Interest in funds outside of core S&P exposure has increased with notable inflows and volumes into the equal-weight S&P 500 (RSP) and Russell 2000 (IWM) recently,” noted Strategas ETF strategist Todd Sohn. So far, the shift in investor sentiment appears to be working, with both the IWM and RSP showing impressive gains in June.
In addition to these funds, Sohn recommends international funds, particularly those in Japan, and the Invesco S&P SmallCap Revenue ETF (RWJ) as other options for investors looking to diversify their portfolios.
Q: What is the iShares Russell 2000 ETF?
A: The iShares Russell 2000 ETF is an exchange-traded fund that tracks the performance of small-cap U.S. stocks as represented by the Russell 2000 Index.
Q: What is the Invesco S&P 500 Equal Weight ETF?
A: The Invesco S&P 500 Equal Weight ETF tracks the performance of the S&P 500 Index, but unlike traditional capitalization-weighted ETFs, it gives equal weighting to all of the stocks in the index.
Q: Why are investors shifting away from tech stocks?
A: Many investors and experts are concerned about the narrow market led by big tech names and are looking for ways to diversify their portfolios and reduce risk.
Q: What other options do investors have for diversifying their portfolios?
A: Strategas ETF strategist Todd Sohn recommends international funds, particularly those in Japan, and the Invesco S&P SmallCap Revenue ETF as other options for investors looking to diversify their portfolios.
These ETFs attracting heavy investment from investors for performing ‘catch-up’ trade with successful outcomes.
Investors are hoping that the tech-led rally will broaden out, despite concerns about a narrow market, according to a report by FactSet. Two exchange-traded funds, the iShares Russell 2000 ETF (IWM) and Invesco S&P 500 Equal Weight ETF (RSP), have already seen inflows of around $4bn and $1.8bn respectively this month, offering investors exposure to a range of stocks while reducing impact from big names like Nvidia and Alphabet. Todd Sohn, ETF strategist at Strategas, said the trend in investing outside the core S&P exposure is helping traditional funds play catch-up. Both funds also have low fees.