FYI: Last week, in the still-recent wake of Facebook’s epic one-day fall and Apple’s unprecedented milestone of $1 trillion in market capitalization, we looked at the impact a single—and massive—company can have on a passive ETF.
Specifically, we looked at the SPDR S&P 500 ETF Trust (SPY), a market-cap-weighted ETF that invests in the companies comprising the S&P 500 Index. As we well know, in this fund, the so-called FAANGs—Facebook, Apple, Amazon, Netflix and Google (now Alphabet)—carry significant weight as a result of their market capitalization alone. These are huge companies, and together they represent nearly 15% of the portfolio.
Any sharp moves in these companies’ stock prices can have a significant impact on SPY’s performance by design, or on any ETF that tracks the S&P 500 in a market-cap-weighted portfolio, such as the iShares Core S&P 500 ETF (IVV) and the Vanguard S&P 500 ETF (VOO)
Regards,
Ted
https://www.etf.com/sections/features-and-news/many-etf-ways-own-sp-500
