The "Ten Titans" are the largest-growth-focused U.S. companies by market capitalization. The list expands on the "Magnificent Seven" -- Nvidia, Microsoft, Apple, Amazon, Alphabet, Meta Platforms, and Tesla -- by adding Broadcom, Oracle, and Netflix. While the Magnificent Seven are influential, with a 33.7% weighting in the S&P 500, the Ten Titans take the concentration a step further -- making up a combined 38.2% of the index.
The Invesco S&P 500 Top 50 ETF (XLG -0.89%) bets even bigger on the Ten Titans, with a staggering 62% weighting in the group. Here's why the exchange-traded fund (ETF) is an excellent choice for maximizing your exposure to the Ten Titans.
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Doubling down on the top 10% of the S&P 500
Invesco is the same investment management firm that operates the largest Nasdaq-100 ETF, the Invesco QQQ Trust. Despite the QQQ's heavy concentration in top growth stocks, it doesn't hold Oracle because Oracle is traded on the New York Stock Exchange (NYSE) rather than the Nasdaq.
The Invesco S&P 500 Top 50 ETF is arguably a better way to invest in top growth stocks than the QQQ because it targets just 50 names across both stock market exchanges. It includes major growth stocks that are not represented in the QQQ, simply because they are listed on the NYSE, such as Oracle, Eli Lilly, Salesforce, and ServiceNow.
By betting big on the top 10% of growth-focused S&P 500 components by size, the fund has significantly more exposure to growth-focused sectors like technology than the S&P 500. Here's a look at how the fund's weighting in the Ten Titans stacks up against other noteworthy ETFs:
|
Company |
Invesco S&P 500 Top 50 ETF |
Invesco QQQ Trust |
Vanguard S&P 500 Growth ETF |
Vanguard S&P 500 ETF |
|---|---|---|---|---|
|
Nvidia |
13.1% |
10.06% |
14.89% |
8.06% |
|
Microsoft |
11.19% |
8.59% |
7.08% |
7.37% |
|
Apple |
10.13% |
7.78% |
4.9% |
5.76% |
|
Amazon |
6.43% |
5.55% |
4.4% |
4.11% |
|
Alphabet |
6.55% |
5.4% |
6.94% |
3.76% |
|
Meta Platforms |
4.88% |
3.75% |
5.77% |
3.12% |
|
Broadcom |
4.13% |
5.25% |
4.74% |
2.57% |
|
Tesla |
2.9% |
2.89% |
2.97% |
1.61% |
|
Oracle |
1.14% |
0% |
1.42% |
0.77% |
|
Netflix |
1.55% |
2.92% |
1.69% |
0.92% |
|
Total |
62% |
52.19% |
54.8% |
38.05% |
Data source: Invesco, Vanguard.
As you can see in the table, the Invesco S&P 500 Top 50 ETF is essentially a more concentrated version of the Invesco QQQ, plus Oracle. It has even more exposure to the Ten Titans than the highly concentrated Vanguard S&P 500 Growth ETF or the S&P 500 ETF. The concentration has paid off in recent years as the Invesco S&P 500 Top 50 ETF has outperformed the other discussed funds, even when factoring in dividends.
XLG Total Return Level data by YCharts
The Invesco ETFs have higher fees than Vanguard's funds. The Invesco S&P 500 Top 50 ETF and Invesco QQQ have 0.2% expense ratios compared to 0.07% for the Vanguard S&P 500 Growth ETF and just 0.03% for the Vanguard S&P 500 ETF. The higher fee would only make a difference on an ultra-large scale, as 0.2% is just $20 for every $10,000 invested.
A worthwhile choice for maximizing your exposure to the Ten Titans
The Invesco S&P 500 Top 50 ETF can be an effective tool for an investor specifically looking to boost their exposure to mega-cap growth stocks. For example, if someone doesn't have a compelling investment thesis for one Titan over the others, they may want a catch-all way to invest in the group. Or if someone owns a good number of top S&P 500 value stocks, like Berkshire Hathaway, Walmart, ExxonMobil, JPMorgan Chase, they may want to filter out those names to concentrate on mega-cap growth stocks.
Before diving headfirst into the ETF, it's worth understanding the volatility that comes with such a top-heavy fund. A company like Nvidia is so large that it can single-handedly move the market. Nvidia's results have ripple effects across the semiconductor industry, affecting companies like Broadcom. Nvidia is the undisputed leader of the artificial intelligence investment theme, which impacts all the Titans. This means that one major correction in Nvidia and a couple of other Titans could bludgeon the Invesco S&P 500 Top 50 ETF much more than the S&P 500.
All told, the S&P 500 Top 50 ETF is a useful way to target the Ten Titans. However, the concentration is a double-edged sword, as it can amplify both potential gains and potential losses.
